How Coffee Cups Can Lead to Economic Development & Inclusion

Where do you buy your coffee cups?
The role of supplier diversity in economic development

Last year, the tech and venture capital worlds were confronted by a fervent call-to-action: a movement to acknowledge their historic culture of homogeneity and demands to meet the moment by diversifying teams, investments, and workplaces. But to many, by early 2021, “diversity” had become a toothless buzzword. Instead of spurring change, it was more often being used by companies to seem more modern, in touch, and inclusive. Diversity. Diverse founders. Diverse founding teams. Diverse talent. Diverse leaders. Diversity of perspectives. We saw a whirlwind of pledges (some met and some unmet) in support of the economic and social mobility for Black Americans, specifically in business, ownership, investment, and culture. When done with intention, diversification can help businesses crack open opportunities for growth and efficiency. And from a human capital perspective, it helps make up for stolen time, through hiring, investing in, and otherwise supporting talent from historically underrepresented pools. 

But there’s another important layer to this movement that’s less often discussed: supplier diversity. It’s one thing to support hiring and investing in Black talent, but it is another to encourage patronage for minority-owned businesses, both large and small, through a different access point of capital--corporate spend. I initially learned about proactive supplier diversity programs when two close friends and former colleagues, Jason Trimiew and LaMecia Butler, became Director of Global Supplier Diversity & Program Manager of Supplier Diversity at Silicon Valley technology behemoth Facebook. We’d worked together on Super Bowl 50 in San Francisco, specifically on the 50 Fund, which was the philanthropic arm of the Super Bowl, and Business Connect, the Super Bowl’s supplier diversity program. So I was incredibly excited to learn what their dynamic team was building around this work. I caught up with LaMecia last month to understand more about the inner workings of supplier diversity, including how it came to be, who can do it, and what the future could look like if corporate entities were thoughtful about who is behind the everyday items and services they purchase, from coffee cups and hoodies to legal support and carpet installation? 

What is supplier diversity? 
At its core, supplier diversity is about contracting and purchasing opportunities with diverse-owned businesses, specifically defined as minority-, women-, LGBTQ-, veteran- and disabled- owned. These opportunities matter because working with diverse suppliers also impacts the founder, their families, the business, and most importantly, the communities they are in. In its fullest sense, supplier diversity creates and grows economic opportunity that otherwise would be absent or insufficient, and the Harvard Business Review examined this case last year.

The impetus for creating economic opportunity
Historically, businesses run by diverse suppliers have been shut out of sales and contracting processes. Remnants of business “redlining” and Jim Crow policies have kept minority products out of the hands of the general public. Further, these practices (similar to “warm intros'' in venture or “hiring from your network”) are still incredibly effective, whether known or unknown, at keeping diverse suppliers out. (“We’ve always ordered our toilet paper from X company.” ”John knows a landscaper, let’s talk with them.”) Sound familiar? “Underrepresented” occurs not just in tech, but in business deals more generally. Many businesses that could provide high-quality products or services for these deals have not just been shut out but actively advocated against in these spaces.

For Facebook specifically, LaMecia notes that “economic justice is racial justice.” Proactive supplier diversity programs can help give Black and minority-owned companies the stage to reach stakeholders and buyers they may not otherwise have had access to. This is especially important in the current economy when other compounding issues--like insufficient access to PPP loans--have already hit minority-owned businesses hardest. Due to this unequal access to support, even in times of crisis (or maybe especially in times of crisis), they have been operating at a disadvantage to their peers. For many, were it not for a conference where they can come to pitch themselves or, in Facebook’s case, have virtual pitch meetings to speak to their skills and capabilities to be accessed, then there is no way to truly right the wrongs of the past. 

Instead, in far too many cases, one of the common misdirections we hear is “why can't the owners just do it on their own? If they just work hard enough and just, you know, put themselves out there and sell sell sell, it’ll happen for them.” These people should shut the fuck up. LaMecia said this in a much more tactful manner that I won’t try to paraphrase:  

“I mean, it's like that whole “bootstrap” mentality--but we all know that's not really the case. What we know about people is when they have a good experience with somebody, they're more likely to use them again in the future. And so if you have come from company X and then you go to company Y and you have the ability to bring that supplier with you, of course, you're going to do that because you already know how well they work. But in doing this you leave a whole group of people without an opportunity to even try. Bringing suppliers with you doesn't always mean that’s the best decision for your new company, because there could be a difference in the need, the rates, the negotiations, the quality of service and there may be somebody out there better that can do the job. But, you'll never know that if someone isn't forcing you to take a look and think maybe there is someone else who can deliver it and maybe it is a diverse supplier. So that's why it’s about--changing how people think when they are purchasing. We want them to think about inclusion versus just replication.”

At Facebook, Supplier Diversity sits in Finance’s “source-to-pay” organization. This group is responsible for everything from discovering and selecting suppliers to confirming and distributing payments. The team works to make sure that supplier diversity is integrated in the existing contracting workflow as opposed to a parallel process run separately. They currently have a tool that helps employees include diverse suppliers in the purchasing process by creating "positive points of friction" through flagging inside of the contracting process. For example, as they enter information, they may see a note asking which vendors they’ve entered are diverse. Or, that says something similar to: “Hey, you haven't included a diverse supplier. Would you like to?” If so, they are rerouted to a discovery function. And if they don’t wish to look for one, they are asked why. Essentially, employees are being taken through a guided purchase progression. The goal is to move towards when someone is purchasing, inclusion being a standard part of the thought processes. Discovery, like with any business or application, is key. 

The elephant in the room, which I must acknowledge, is that Facebook is an enormous company. It has resources and bandwidth to plan and spend on a need like this. But, truly, any company, or person for that matter, can do it. It’s more a point of understanding the commitment and less about any specific hurdles or means to do it. 

How to tap into supplier diversity
There are local, national and international organizations that help certify diversity. Not only can these groups identify diverse suppliers, but they can also provide a form of fact-checking and include site visits that help ensure organizational and operational excellence. In addition, regional/city/state offices often have supplier diversity programs/directories that can be reviewed for free. For example, the California Public Utilities Commision, the City of San Francisco Office of Small Business, Austin Small and Minority Business Resources. Other organizations to look into for direciton are National Minority Supplier Development Council, Womens Business Enterprise National Council and the National Gay and Lesbian and Chamber of Commerce. These are just a start, but in these early days, the true commitment is to the legwork to find these organizations that work best for your needs. 

Finally, while it’s important that companies do the work, we must individually remember that it can start with just a single employee. It doesn’t have to be top down--change and inclusion can start with you. If you have purchasing power, you can help influence and take action to purchase and contract with these companies. 

To close, I asked LaMecia what does the future of supplier diversity look like if we do everything right? And she gave the best response: “We want to work ourselves out of a job.” Supplier diversity teams are not teams that should be getting bigger. If folks do this work right, people and purchasers are holding themselves accountable as opposed to a team that has to do it. If we do this well, we will see an equitable spread of wealth from the supplier side for the world’s largest corporations.