to small businesses, small disadvantaged businesses, and women-owned businesses in both its acquisitions and its awarding of subcontracts.
Examining the Evolution of Supplier Diversity
The executive orders I cover in the earlier section “Looking at Where It All Began” were based on the government’s desire to do something to address systemic economic disparities within the Black community. The orders stated what needed to be done with regard to inclusive hiring and business practices, but they didn’t provide a framework for how it should be done. This vacuum left the field wide open to interpretation, resulting in abuse, fraud, and neglect. Organizations and agencies were left with their own understanding and created programs that they felt worked for them and were reflective of their cultures at the time. For better or worse, the organizations of yesteryear aren’t the culture-centric organizations of today. Not every organization was successful with its efforts. But despite these mixed results, supplier diversity programs forged ahead and began to really take shape during the 1970s.
According to Dr. Fred McKinney, one of the country’s foremost supplier diversity historians (not to mention technical editor and contributor for this book), supplier diversity includes three distinct periods: compliance, right thing to do, and making the case. Figure 2-1 looks at each period of supplier diversity and the shift in organizational priorities during each phase.
FIGURE 2-1: Evolution of supplier diversity.
MAYOR MAYNARD JACKSON AND SUPPLIER DIVERSITY IN ATLANTA, GEORGIA
A legendary example that resulted in the creation of some of the most substantial Black businesses that still exist today is the one created in Atlanta by the Honorable Mayor Maynard Jackson. This demonstrated the potential of supplier diversity.
Maynard Jackson, Atlanta’s first Black mayor, is one of the most revered mayors in Atlanta’s history; many regard him as the father of modern-day supplier diversity. He won the election partly on his promise of economic prosperity for all Atlantans. His approach made him a legend and made Atlanta a model for economic inclusion.
At the time of Jackson’s election in 1974, Atlanta was embarking on one of its most ambitious projects ever — expanding the Hartsfield Airport (now commonly known as the Hartsfield-Jackson International Airport) into an international hub. Upon assuming office, Mayor Jackson met with business leaders and told them he would move forward with the expansion of Hartsfield Airport on one condition: 25 percent of all contracts were to be set aside for minority firms. Jackson reportedly told those in opposition that the city wouldn’t build the airport if they didn’t agree to this stipulation, and he held fast to his offer of 75 percent of the project or 100 percent of nothing. As expected, the business elite recoiled, and Jackson’s administration prepared for a long fight.
Over the next two years, Mayor Jackson fought some of the most powerful men in the South who were using their clout to call in political chips to get the governor and state legislature to take control of the airport expansion project. For Mayor Jackson, the stakes were high. This was not only a campaign promise but also an opportunity to provide Black business owners something previously denied them: access to a share of contracts on a major public works project initially valued at $450 million. The mayor used the delay to sell corporations on creative ways to work with Black firms. One novel concept at the time was creating a joint venture with minority firms. This model is now widely used across the world and is often a requirement on public construction-related projects.
By 1976, the parties finally came to an agreement. All parties would eventually agree to Jackson’s modified version of his plan: a goal (not a mandate) of 20 to 25 percent participation of minority-owned firms.
Five years later, Jackson increased the percentage of contracts awarded to minorities from less than 1 percent in 1973 to roughly 39 percent. This surge strengthened the Black middle class and created an affluent business community that still exists today.
Compliance with federal law (1969–1990)
Supplier diversity got its start with the federal government, but by 1968, several leading companies, such as General Motors and IBM (who were also federal contractors), were compelled to launch their own supplier diversity programs. Large corporations and the government have always had a close relationship. In the early days of the United States, it was nothing for the government to borrow money from private bankers when it ran a little short.
To this day, many corporations are vendors that provide the government with a variety of goods and services. With the establishment of the executive orders I cover earlier in the chapter, these vendors were under regulatory pressure to provide contracts to minority-owned businesses. Although some were inspired to create their own programs, many were motivated to simply remain compliant in order to continue to win contracts. This period came to a close because of legal challenges and backlash against laws designed to promote minority business development.
The right thing to do (1990s–early 2000s)
Up until this time, the government or the public sector was the main force creating opportunities for minority businesses. But as legal challenges abounded, businesses began to shift their focus to look at opportunities in the private sector with corporations. The leading organization that certified minority firms and advocated for minority businesses interested in doing business with corporations was (and still is) the National Minority Supplier Development Council, or NMSDC.
During this time, NMSDC strategically shifted its focus from a publicly funded organization to an organization funded by and focused on corporations. Corporations began to publicize their efforts in their communications, often touting supplier diversity as the right thing to do, and to formalize their programs by hiring personnel, developing processes, and investing in systems that allowed them to track utilization, which then can be reported.
This era was the first time a true business ecosystem was created, and minority businesses benefitted greatly. It also created a model for advocacy and certifying organizations that represent other socioeconomically disadvantaged groups such as women, the LGBTQ community, and veterans.
Making the business case (2000s–present)
The 2000s were marked by several shifts in the marketplace — the tech industry, changes in demographics, the growing influence of consumers, and the increased globalization of business — that had a tremendous impact on corporations, the likes of which they hadn’t experienced before. Each of these factors presented new challenges and raised the stakes for supplier diversity to not simply comply with government regulations or push its feel-good message as the right thing to do. Supplier diversity needed to help the organization maintain a competitive advantage by making the business case to support its reason for being.
As I describe in Chapter 7, a strong business case for supplier diversity focuses on the tangible impact or metrics you can monitor through measured performance results. It’s sustainable in ways that the phases in the two preceding sections weren’t. Compliance allows programs to be challenged or risk being shut down based on court rulings. Programs based on an emotional appeal like
