Why Don’t We Have a Kauffman Foundation?

I was reading this article on Xconomy about their new partnership with the Kauffman Foundation, and the titular question immediately struck me: Why Don’t We Have a Kauffman Foundation?

Think about it: we are a center of innovation, but one of the most difficult places in the country to start and sustain a new business (see Indicator 13). And what do they focus on? Improving the success of entrepreneurship and commercialization!

Minority-Owned Businesses in the Great Recession

PSBJ has a story about how “[m]inority-owned small businesses in Washington state and across the nation could be at greater risk of failure during the recession due to their limited access to credit, increased competition and overall weak sales.” Not a shocker, certainly. Running a business in a recession is hard. Running a small business in a recession is harder. And sadly, running a minority-owned small business is even worse.

Scared Of Contracting With Minority Owned Businesses!?!

So, I-200 (prohibiting the state from using race or ethnicity in deciding student admissions, employment or contract awards) has lots of detractors, particularly among the minority-owned business community. But this quote is really eye-opening:

“I-200 has impacted state agencies in a way that in some cases they are overly cautious about reaching out to diverse suppliers,” Cooper says. “There’s this atmosphere of ‘I’m not sure I can do this’ and that does not level the playing field. It does just the opposite.”

Essentially, state departments are saying, “It’s not worth the potential headache to hire certified minority-owned firms, so I’m not going to.”  No wonder that less than 1% of state contracts go to MBOs.

The underlying question is, in a period where certification is a hinderance, is it worth getting certified?  Certification gives a stamp of approval to companies to say that they are truly owned at least 51% by a minority (or woman) owner, and that’s great for corporate contracting where large corporations have a certain spend that they’re trying to get to with diverse businesses.  In fact, I know that a lot of companies ask some of their minority-owned firms to get certified so that they can count them officially in their reporting.  But for government, where departments are prohibited from factoring in race, getting certified apparently opens up a whole can of worms.  If we’re going to ask MBOs to get certified, which is a time and money consuming process, we better make sure there’s value in it.

Things You Are Going To See a Lot More Of, Part 2

This.

There are two parts to this story. First off, minority-owned businesses are struggling because all businesses are struggling (fyi, the economy isn’t very good right now.) Second, though, is that a lot of companies still see diversity inclusion programs (both in hiring and contracting) as extra things they do to be good corporate citizens, not vital parts of their profitability and viability. Ipso facto, as budgets get cut at large corporations, less is being spent on ensuring that the largest number of suppliers are included in the procurement process. It’s a short sighted strategy, and counterproductive, but not unexpected until we do a better job of incorporating supplier diversity best practices into the procurement process of all our region’s companies.

Leading with the Product

A couple weeks ago, I had the pleasure of putting together a panel discussion on the minority-owned business ecosystem at the Filipino Chamber of Commerce business conference. The idea of the ecosystem is that – in order to successfully support and grow minority-owned business in our region – all the stakeholders need to be functioning effectively in relationship to each other: the businesses themselves, large businesses that provide contracting opportunities, business resource providers that offer technical assistance, education, financing, networking and advocacy; and government (which provides contracting, business resources and the policy framework).

A Profitable Bank!?!

This article about the new president of UniBank is really an article about the success of “ethic-focused banking” (I just made up that term…I’m sure there’s a better one). Plaza Bank is another example of this approach.

In some way, this is just basic business school marketing: identify a specific, potentially underserved market share and target your services toward it.

Let the Numbers Do the Talking

So, this is really the case for supplier diversity.

If we don’t have a good business climate for minority-owned businesses, there literally will not be enough qualified suppliers with the capacity to serve our large cluster businesses. Any questions?

It Takes a Village (of Aerospace Companies)

One of the many things I learned today at the Boeing Supplier Diversity Symposium and Showcase is that 70% of Boeing’s work (in terms of dollars) is done by companies other than Boeing. Boeing’s revenues in 2007? $66.4 billion. All in all, approximately $2 billion in contracts went to women- and minority-owned businesses, keeping Boeing as one of only 14 companies on the Billion Dollar Roundtable (corporations that do more than $1 billion in spend with diverse suppliers).