Corporate and Prime Supplier’s role in diverse business growth by David Gupta, CEO SDI Presence

As corporate America looks to play a meaningful role in addressing social inequities, organizations are reassessing their existing, traditional supplier diversity programs.       To lower risk, most corporations have customarily encouraged diverse businesses to partner with (i.e. subcontract under) larger, established prime contractors organizations as first entry point into the company. However, corporations have offered little or no guidance on the role that the primes should play to help the diverse businesses grow, and to put them on the path to gaining prime contracts themselves. To the prime, these diverse businesses just represent a simple percentage needed to fulfill a contractual obligation. The diverse firms usually are treated as staff augmentation, with no sustainable growth and no formal mentorship. This approach does not prepare the diverse business for success and very much stifles the intended positive economic impact.

For corporate America to create real economic impact in the communities in which these diverse businesses reside, it is important that supplier partner programs incorporate mechanisms to truly help diverse businesses grow in meaningful ways, as well as include structures to assist diverse firms in pursuing prime contracts. Rather than offering staff augmentation roles – which are limited in their ability to build strategic capacity – diversity programs can identify project scope that is in alignment with the MBE partners’ strategic intent. Also, programs can include mentorship to guide the diverse businesses on building their back-offices to support healthy and sustainable growth.

Developing these programs may sound like a heavy lift, but in fact they do not have to be built from scratch. Currently, there are non-profit organizations that are creating measurably successful environments for diverse businesses to thrive that corporations can learn from and partner with today. One such organization is Chicago United, whose Five Forward initiative™ contains all the elements needed to stand up a successful prime program. The foundation for Five Forward is that a prime firm (committed corporation) commits to the growth and mentorship of five diverse partners for five years. My company, SDI Presence, has participated in the Five Forward initiative™ since 2008 and we have found it to be a very successful program to both build capacity and ready peer MBEs to take on prime contracts. SDI has a unique view of the program, as we participate both a committed corporation with diverse partners of our own, and as an MBE to committed corporations.

One key to making such a prime program such as Five Forward work is to
locking in the commitment of the senior leaders – preferably the CEO – of the prime organizations. Other keys elements of success include having a documented pledge for growth, commitment to mentorship, and accountability through regular metrics and reporting of both the program’s spend and participant satisfaction. Having a mechanism to measure is key, not only for the financial impact of firms involved but so for the economic impact to the organization’s communities. As corporations seek to recast their existing supplier diversity programs to make a greater impact, they can consider the adoption of such diverse programs above to be a prerequisite condition for a large prime vendor to do business with their organizations. Corporate America needs to make the investment in diverse businesses not only a business imperative to their organizations, but also to their primes if they are truly going to move the needle in the right direction to address these social inequities.