Over the course of the last year, it seems like almost every company in the U.S., and many around the world, have made statements to indicate their support of racial equity and committing to do their part to help national and global economies “build back better.” It is evident that some of these companies are putting more effort into saying the right things rather than putting their words into action.
But even among the companies that are earnestly exploring the ways their businesses can advance racial equity, there seems to be a pervasive mental model that is getting in the way of having more impact. That mental model is exemplified in the conversation I had a with a senior business leader at a Fortune 500 financial services company last week:
“I worry that we are trying to make the opportunity fit us, rather than seriously exploring what we need to change about ourselves to take advantage of the opportunity.”
I appreciated the honesty and the introspection that was behind that comment and the more that I thought about it, the more I realized that this is precisely what most companies are doing. Companies are directing their traditional products, services, distribution systems, hiring systems, and marketing strategies at new segments, new communities, or new social problems.
But that is not going to work.
At least it’s not going to work at a scale that will allow companies to affect the lives of thousands of customers, employees, and community members that live near their offices and factories. If companies are having a hard time finding and advancing BIPOC talent, they can’t simply look for talent in the same places, in the same ways, and with the same talent evaluation systems. If companies are exploring ways to advance health equity, they can’t simply continue to use the same profit algorithms to determine commercialization, marketing, and product development strategies. If companies want to have a meaningful impact on closing the racial wealth gap, they can’t simply direct their existing products and services to new communities.
For the companies that are truly committed to advancing equity, they need to take a different path. It’s a harder path to navigate, but it is much more likely to lead to concrete results.
First, they most likely need to commit to a new set of principles, such as those articulated in our CEO Blueprint for Racial Equity. By the way, in committing to these principles, companies should not have to see a business case that proves that the principles will make the company more profitable. We don’t expect there to be a business case for companies to commit to anti-corruption practices or to comply with the law. Similarly, there shouldn’t be a need for a business case to follow the principles of racial equity.
Going beyond the principles, however, does require a rigorous approach to developing business strategy. Here, companies need to carefully examine the ways that their business models and strategies intersect with the systems that are keeping inequities in place, decide which of these conditions represent a business opportunity for them (e.g., new growth market, opportunities for greater efficiencies or flexibility, etc.), and then figure out what new products and services, communications strategy, market insights, and business assets they need to build or acquire in order to have a workable business strategy. New opportunities, including those that have social impact and advance equity, require developing new tools and assets. The serious companies will devote the necessary resources to acquiring those tools.
FSG is working actively with many companies to help them navigate this space. We are helping them develop equity frameworks to guide them on how to integrate equity throughout their strategy, processes, and operations. We are helping them develop measurement systems that assess how well they are doing in their equity journey and to use the assessment to strengthen their strategy. And we are helping them use the Purpose Playbook to develop a balanced purpose portfolio to increase their impact.
You can learn more about FSG’s corporate racial equity work here and I welcome your thoughts on how corporations can change their mindset.