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FocusOn Diversity

By Prabhakar Mundkur, Chief Mentor at HGS Interactive

Who ever would have thought that diversity would rear its big ugly head, enough to shake up an entire organisation and even threaten its leadership? And that too drive a mammoth giant like Google into its biggest public relations crisis.

The author, James Damore, wrote the infamous memo on a long plane flight and posted it to an internal company message board. He might have done the wrong thing by going against the company’s code of conduct by propagating ‘harmful gender stereotypes’, but many experts say there might be some truth in the memo. The thrust of his memo was that the gender gap was a function of biology more than anything else. Silicon Valley is filled with engineers who believe women are less capable and interested in computer programming, and who use that belief to justify the outcomes of a culture that’s often hostile to women.

The strange thing is that even Artificial Intelligence that is taught the English language and fed the 940 billion words on the Internet will emerge with racial and gender biases unless corrective algorithms are fed into the young AI. Cognitive biases are so much a function of what has happened in the present and the past and there seems no reliable way to erase it. And unlike Artificial Intelligence, humans can’t be embedded with corrective algorithms. Which is a pity!

Although the equivalent of embedding humans with corrective algorithms seems to be diversity training at Google which trains people to think without bias. Google introduced training in 2013 to make employees aware of hidden biases, such as hiring a man over a more qualified woman because of an unconscious assumption the woman will be distracted by child care. Experts say that the fundamental challenge of diversity and bias training is that people don’t like to be told what to do and think. That’s why an instructor’s words can quickly backfire if they put the audience on the defensive. And in the case of James Damore it certainly seems to have backfired. An algorithm with a bug gone terribly wrong!

In an interview with Wall Street Journal he says ‘For many, including myself, working at Google is a major part of their identity, almost like a cult with its own leaders and saints, all believed to righteously uphold the sacred motto of “Don’t be evil.”

Echo chambers maintain themselves by creating a shared spirit and keeping discussion confined within certain limits. As Noam Chomsky once observed, “The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum.”

… In my document, I committed heresy against the Google creed by stating that not all disparities between men and women that we see in the world are the result of discriminatory treatment.”

The rather tragic thing is that James Damore says he wrote the memo because he wanted to improve things at Google rather than harm it. One could well believe that given the latest diversity statistics from Google which state that 80% of its tech workforce and 70% of its leaders are men. The main thesis of his memo is that women generally have a stronger interest in people rather than things and this may in part explain why women relatively prefer jobs in social and artistic areas. Of course Damore is speaking the language of averages. He explains this inherent biological difference may result in the overall under representation of women in tech.

Mysteriously the memo which was written a month ago seems to have become a problem only after it went viral, forcing the senior management to take action. Which raises an important question. For a whole month the memo did not seem to have contravened the code of conduct of the company. While diversity has always been a sensitive subject with companies, who would have imagined that it would one day become a crisis in a big mammoth company like Google and bring disrepute to the company, threatening the reputation of even its senior management. Of course diversity has been bobbing its ugly head recently. The Susan Fowler sexual harassment case meant 20 people got fired at Uber.

In the meantime, James Damore is infamously famous and has more media and publicity than he can handle and certainly more than anyone at Google.

Your Editor Concurs: Diversity makes for kinder societies

By Javier Saade, Huff Post

For digital natives the term “broken record” means the same thing that it means for generations that had to deal with broken, or more accurately, scratched or debris-ridden records. At the risk of sounding like, you guessed it, a broken record: Diversity in all of its forms leads to the best possible outcomes. But in business, the push for inclusive diversity may hamper scaling it because the focus has been “what” as opposed to “how”. This is true for any business and especially true for tech-driven new economy businesses. Scale is key to sustaining activities and businesses in any field of endeavor.

From governments and the policies they enact, to boardrooms and the management teams they govern, to universities and the young minds they help shape, to philanthropic foundations and the missions they pursue, to investors and the allocations they make, to executives running down a marketing strategy – more diversity is a good thing, lets take this as a given. It does not matter if you look at it through a social justice lens or through a mercenary profit-maximizing lens. So what?

In early June, The Aspen Institute’s Latinos and Society Program is bringing together a broad set of stakeholders and perspectives to bear upon a persistent and important part of the diversity challenge. The group will be trying to answer a big question: Why do Latino-­owned businesses fail to scale? You can substitute the word “Latino” for “African American”, “Veteran”, “Native American”, “Women Owned”, or any underserved slice of our country’s population.

Interestingly, this same dynamic applies to mainstream Americans in our heartland. I wrote about the parallels between traditionally defined underserved groups, like Latinos, and this massive and mostly white demographic. The fact is that families in Beattyville, Port Gibson and East LA have a lot more in common than not, but this is another story.

The vast majority of Latino-owned businesses are underserved, yet a good number of them are superbly capable and scalable businesses. Failing to scale leads to a panoply of corollary challenges that institutionalize and calcify this sidelined reality. Is there a way to break the cycle? Yes. Can underserved groups do it alone? No. The expected outcome of the Aspen convening is to crystallize a set of concrete, actionable and high impact solutions to address the scaling challenges affecting Latino-owned businesses and by proxy, the economy as a whole.

Despite of all the tech-driven advances made via decades-in-the-making confluence of seismic innovations; the digital divide continues to get bigger, wealth gaps continue to widen, and access to productive economic activity along with the capital that fuels it remains elusive. The digital economy and hyper-efficient future of work should, in theory, help unlock potential for everyone. But it is not. While more on-ramps increase prosperity, lower friction and enhance pathways to scaling, they are scantly and sporadically reachable.

I have witnessed this with career chapters that include being an investor, board member, entrepreneur, ex policymaker, Fortune 500 line executive and currently as a venture capitalist at Fenway Summer backing entrepreneurs innovating at the intersection of finance and technology. It has been a great ride so far but this multi-lensed view has led me to a sad realization. While change has been relentless and on the whole, positive, many of the challenges underserved populations face, including Latino-owned businesses, remain the same as when I started my career.

In February 2016, I took a second look at a paper Angel Morales and I wrote at the turn of the century. We explored the dearth of venture-backed Latino-owned businesses as a final paper for a graduate school class. Our professor, the inimitable Josh Lerner, liked the paper and encouraged us to submit it to the Journal of Private Equity. The paper was published, much to our surprise, and the editor gave it a lengthy title: “Hispanic-American Venture Capital: Financing the Growth of the Latino Market”. It was written long ago but what was happening in the economy mostly fueled by the internet/dotcom boom is not unlike to what’s going down today, with some notable differences.

The promise of technology driven prosperity was, and continues to be, bright and exciting. But when we dug a bit beneath the surface, what we saw was that within underserved markets, a massive capital formation gap existed not dissimilar to its looming presence today. This capital formation gap is arguably one of the biggest roadblocks preventing Latino-owned businesses from scaling.

While there are differences between the dynamics of what was happening in the late 90’s vs. today, what stands out to me are the parallels across several dimensions of the entrepreneurial economy and its investment cycle. The piece we published almost two decades ago points to the fact that almost nothing has changed. Specifically, the root causes haven’t changed. Those include things like lags in wealth creation, comparative lack of buying power, educational access difficulties, thin professional networks, political underrepresentation and the blind spots of traditional credit and lending. These issues, it shall be said again, apply to every underserved groups and I worked on them firsthand during my stint as a senior official and policymaker in President Obama’s administration.

Below are passages from the “oldie but goodie” article from almost two decades ago:

ONE

“The solution lies in increased access to capital, particularly equity funding. Capital access is a prerequisite for increased participation in the mainstream economy. To sustain growth, Latino companies need greater access to supplies of capital at all critical stages of business development, including equity and seed capital. Difficulty accessing traditional debt financing, and the relative lack of personal/family wealth in the Latino community (which often serves as a measure of either explicit or implicit collateral for a loan), exacerbates the problem. Without dependable pools of equity capital to fund Latino firms in their early stages, the majority of these firms will continue to conduct business as ‘mom-and-pop’ operations. Like their ‘mainstream’ counterparts, Latino firms will need to access venture funds to finance expansion and to tap into the expertise and the relationships that often come packaged with venture capital.”

TWO

“Had many of today’s largest U.S. companies not been able to access the “right” pool of early-stage equity capital decades ago, some of them probably would not exist today, and many might not have achieved their present success. Venture funds often serve not only as the best source of financing available to new businesses because of the business expertise and contacts provided—but often as the only source of financing, as debt financing (until, perhaps, very recently) has been largely unavailable to early-stage companies. The key to catalyzing Latino businesses’ growth that will allow them to approach parity with other American businesses lies in venture capital.”

THREE

“Though the U.S. capital markets are as efficient as they come, often times fundamental changes in the way an industry conducts its business—whether it be the commercialization of a new technology or addressing a previously ignored market—can take many years to evolve. An appreciation of the Hispanic opportunity, and ultimately an enhanced degree of financing for its early-stage ventures, would represent a fundamental change in the U.S. private equity industry currently suffering from the ‘chicken-and-egg’ problem that so many movements endure before capturing critical mass. In order for financiers to provide dedicated capital to Latino firms, it must be demonstrated that the Latino market offers a sufficient number of profitable opportunities to justify dedicating such capital. Yet the primary hindrance to new Hispanic firms is the lack of capital. Clearly, the availability of dedicated capital and the existence of promising firms must coexist in the same entity—a condition that would, in essence, describe a ‘Latino incubator’.”

FOUR

“Despite much of the cynicism about incubators, proponents and detractors agree that entrepreneurs can only benefit from all the new incubation resources flooding the market. The most frequently cited advantage of incubators is that they allow entrepreneurs to ramp up their companies very quickly—an imperative for first-mover advantage in today’s super-competitive market. Not only do incubators eliminate the need to look for office space, equipment, and Internet services, but they also foster an environment that encourages the exchange of ideas. Another major benefit, particularly for entrepreneurs at VC-backed incubators, is a tight connection with their patrons. This supports and speeds them through rough patches, and speed is the operative word. The amount of time one can spend to seize a business opportunity has been drastically shortened—from two years down to just six months. The most significant advantage of incubators isn’t the services they offer but the fact that they actually work… It may give you the spit shine you need—plus a personal introduction— to find venture backing.”

FIVE

“For historical socioeconomic reasons, including a lack of access to relevant business networks, the early-stage “development gap” among Hispanic firms will have to be met by entities structured more like incubators than traditional private equity firms. If they are to demonstrate the explosive growth of their mainstream American counterparts, Latino firms will require truly active early-stage investors—not passive check writers with a commitment to attend board meetings once a quarter. In many critical respects, Latino owners and managers will resemble the management teams of today’s Internet firms. The entrepreneur of the 1990s embodied youth, intelligent and creative ideas, and non-traditional perspectives. But these characteristics alone did not create success. It was the harnessing of these ephemeral qualities by the right people and the right institutions, to create competent managers and viable business models, that produced the Internet revolution in the second half of the decade.”

SIX

“Furthermore… Latinos have not prospered economically to the same degree as has mainstream American society. For this and other related reasons, [Hispanic-owned businesses] will continue to be smaller in scale and scope than other U.S. start-ups, and Latino entrepreneurs will continue to suffer from inferior access to the relevant business networks…”

Given the breakneck speed of change and innovation, one would want things to scale faster and more inclusively in the next two decades compared to the last two. Our country’s undisputed but continually challenged global economic dominance is fueled by the innovation capabilities of our small businesses – and we want them all out on the field taking swings, stealing bases, trading players… you get the picture.

The turn of the century passages above are a blast from the past and simultaneously, back to the future. This slow changing landscape has arguably helped further concentrate wealth, push talent to the sidelines, and driven capital under investment. The good news is that there is a lot of opportunity to improve and I hope that the group being convened in early June deep in the mountains of Colorado finds some lynchpins that help break the logjam.

By Ronald Wong

There have always been “Two Americas.” More than 30 years ago, Governor Mario Cuomo described a “Tale of Two Cities” during his keynote address at the Democratic National Committee. Cuomo’s speech was in response to President Ronald Reagan’s characterization of America as a, “shining city on a hill.”

“But there’s another city; there’s another part to the shining city; the part where some people can’t pay their mortgages, and most young people can’t afford one; where students can’t afford the education they need, and middle-class parents watch the dreams they hold for their children evaporate,” Cuomo declared in his keynote address.

The inequities and poverty which Cuomo spoke of in 1984 are even more dramatic today. Sadly, indeed, the rich have gotten richer, and the poor poorer.

But nothing has brought the divisions within America more to light than the recent election of Donald Trump as President of the United States and leader of the free world. America has never been more divided: divided by race; divided by class; divided by gender; and divided by most every attribute which defines human existence.

America is not only more divided, but it is more diverse and growing more diverse by the day. In the United States today, more than 21 of the top 25 most populated counties are more than 50% multicultural. In California, a majority of the population (57%) is Latino, Asian Pacific Islander (API) or African American–22.2 million out of California’s total population of 38.8 million are people of color. Latinos alone outnumber Caucasians in California (14.99 million vs 14.92 million, respectively).

Other states with more than 50% multicultural populations include Hawaii, New Mexico, Texas and the District of Columbia. Emerging majority-minority states include Nevada, Maryland, Georgia, Arizona, Florida and New York.

Immigration is fueling America’s increasing diversity. APIs are the fastest growing ethnic group in America, followed by Latinos. In California, Latinos and APIs will provide virtually all of the growth in California’s population over the next 45 years.

The U.S. Latino population topped 54 million (17%) as of July 2013, an increase of 2.1% over 2012. Meanwhile the API population grew to 19.4 million (6%), with a growth rate of 2.9%.

America’s diversity is inevitable–but are divisions as well? In our country’s brief history, we have embraced diversity; in fact, our country was built upon it. Immigration has always fueled our country’s growth and success.

Regardless of the current political climate and the views of our President, immigration has been and will always be an essential part of the American story–all of our stories; whether we are recent immigrants or have been here for generations.

Diversity is part of the American fabric. Companies which embrace and celebrate it are being richly rewarded. Here in California, most companies market and reach out to ethnic communities as a matter of course.

As the buying power and social influence of ethnic groups continues to expand, it becomes indispensable for marketers and advertisers to understand their expectations and preferences. The buying power of U.S. Latinos now exceeds $1.2 trillion annually. (Nielsen-Hispanic Spending on Packaged Goods, 2015). Latinos Consumer Spending is expected to grow by 85% over the next 10 years, compared to 50% of non-Latinos.

API buying power was $770 billion in 2014 and is expected to increase to $1 trillion by 2018. APIs are the most affluent of the multicultural segments.

In reaching the Latino and API communities it’s important to remember that these are immigrant communities and reaching them isn’t as easy as advertising in the mainstream English-language media. 90.4% of APIs speak a language other than English at home. Of that, 57.5% report speaking English less than “very well.” 74% of APIs and about half of Latino adults are foreign-born, so their preferred language may not be English.

Nearly half of people of color prefer watching ethnic television. 45% percent of all African American, Latino, API, Native American and Arab Americans prefer ethnic television, radio or newspapers to their mainstream counterparts. These “primary consumers” also indicated that they access ethnic media frequently. In addition to the 29 million “primary consumers,” ethnic media also reaches another 22 million ethnic adults on a regular basis. The overwhelming majority (80%) of the ethnic population is reached by ethnic media on a regular basis.

Communicating to ethnic audiences in their language of preference is only the first step. It’s not as easy as simple translation. To truly motivate behavioral change, sell a product, change an opinion, or create brand loyalty you have to meet the people where they are and talk to them in ways that demonstrate a sincere understanding of their hopes, their fears, their dreams and aspirations.

This is why we created Imprenta Communications Group, an award-winning public affairs, ethnic marketing and campaign firm which specializes in reaching diverse audiences. Imprenta’s mission is to empower communities of color by giving them a voice and communicating to them in ways which respects their diversity and understands their culture.

This respect of diversity and deep understanding of communities of color has fueled Imprenta’s radical growth and success. For 2 years in a row, Inc. Magazine has recognized Imprenta as one of the fastest growing companies in America. The company is also one of the most decorated public relations agencies in the country, including being recognized as the 2016 Boutique Agency of the Year, among many other awards and recognitions.

By embracing and celebrating diversity Imprenta is helping its clients succeed and win in the market place. Inclusion and tolerance has always made America a winner on the world stage – companies which are in tune to the changing dynamics and implications of a truly multi-ethnic global market will continue to thrive.

America has the most talented workforce and the strongest economy in the world. We can’t deny that our diversity as a nation has been a big part of that success – it’s a unique strength given added importance as our nation’s population becomes ever more diverse.

Whatever your political leanings or social views are, the market will speak and determine our fate. Companies that ignore or dismiss this evolution of the American consumer do so at their own peril.

Ronald Wong is the CEO of Imprenta Communications Group

A study by Renew Our Economy, org

Immigrants hail from a wider range of countries now than at any other point in U.S. history, and today, New American Economy released new research showing that a more diverse America benefits both high- and low-wage workers.

The report—an analysis of data from the U.S. Census Bureau—tracks individual workers in 160 U.S. metropolitan areas between 1991 and 2008, and measures how their wages change as their cities or workplaces become more diverse. Diversity, as defined by the authors, means that it is more likely that two people in a city or workplace, chosen at random, are from different countries. Metropolitan areas can become more diverse in multiple ways—by shrinking their native-born population, growing their foreign-born population, or absorbing immigrants from a wider variety of countries. The report shows that when diversity increases through immigration, meaningful wage benefits accrue to all workers—from the highest earners down to the lowest.

“This report should encourage the many U.S. cities and firms creating policies to welcome and integrate immigrants,” said John Feinblatt, Chairman of New American Economy. “With Congress gridlocked, local leaders are taking the initiative – and increasingly bringing the economic benefits of diversity to their communities.”

The report, The Riches of the Melting Pot: How Diversity in Metropolitan Areas Helps Grow the Wages of Low- and High-wage Workers, finds:

  • Both low- and high-wage workers gain when U.S. cities become more diverse. When a city experiences a diversity boost, the average person living in the metropolitan area sees their wages rise by about 6 percent. These wage increases are broadly shared: Workers in the top 25 percent of all earners see wage increases of 6.6 percent, while workers in the bottom 25 percent of all earners experience a 7.1 percent wage boost on average.
  • Increases in diversity among the highest earners in a city result in dramatic wage gains for all income groups. A diversity boost concentrated among the top 25 percent of earners in a metropolitan area results in an 18 percent wage jump for other high-wage earners in the area—or an average increase in wages equivalent to $13,000 per year. Local workers in the bottom 25 percent of earners, meanwhile, see their annual wages rise by 16.2 percent on average, or by about $4,100.
  • Low-wage workers benefit from rising diversity in the bottom half of the labor market. A diversity boost among the bottom 50 percent of wage earners in a metropolitan area raises the average local wages of workers in the city overall by 1.6 percent. That effect, however, is driven by dynamics at the lower end of the labor market: While other workers see a statistically insignificant effect, the lowest 25 percent of earners see their wages rise by 2.1 percent on average.
  • Increasing diversity among the lowest earners has either a positive or neutral effect on others. When the lowest 25 percent of earners in a given workplace experiences a diversity boost, the wages of other workers at that company—across all income tiers—rise. At the metro level, such a diversity boost appears to have no significant effect—either positive or negative—on the income of other local workers.

Read The Atlantic’s CityLab coverage of the report by staff writer Tanvi Misra, “Diverse Metros Mean Higher Wages For All.” Contact Sarah Doolin Roy, sarah@renewoureconomy.org

Your Editor Recommends: Look around and diversify