Lean, focused MBEs flourish in a tricky economy
“Don’t try to be everything to everyone, and use geography to your advantage.” – David Segura, VisionIT
MBEs should focus on networking, planning, defining core competencies, and diversifying
By Angela Herrmann
The economic downturn and the government shutdown may have crippled some businesses, but many minority business enterprise (MBE) leaders in IT and engineering fields emerged mostly unscathed. In fact, some MBEs grew during these challenging times.
The winners were the MBEs whose leaders planned ahead, focused on what they do best, and continued building relationships, observers say.
“There wasn’t a lot of negative impact, particularly not on the IT companies, because they typically run very lean and are not capital-intensive,” says Joset Wright-Lacy, president of the National Minority Supplier Development Council (NMSDC, New York, NY).
“Though the recession was challenging for many MBEs, they knew how to manage within it and lead through it,” says Wright-Lacy. “Access to capital is an issue, so most MBEs tend to be financially prudent. The recession made them focus more on managing their budgets and not overspend.”
The government shutdown had mixed impacts on MBEs. Worker layoffs in large companies sometimes trickled down to smaller business partners, Wright-Lacy notes.
When companies do belt tightening during a government shutdown or economic downturn, Wright-Lacy observes that some MBEs can benefit, since they can often deliver products and services at a lower cost than large competitors. “And technology projects don’t stop,” she says.
CSMI focuses on core competencies
Dr Karen Eng, who has been president and CEO of CSMI, an Asian/Pacific Islander minority-owned and women-owned business enterprise (WBE) since 2000, confirms that her projects didn’t stop during the economic downturn. CSMI does project management, packaging, electrical and controls engineering for companies in the U.S. and abroad.
“We did not experience anything with that recession. In fact, our company grew consistently over the past few years,” says Eng. She credits that to the lessons she learned from the recession that followed 9/11.
“The economy wasn’t good and I didn’t prepare for it. I said I would never go through that again,” says Eng. Now she and her staff do a lot of strategic planning to stay on top of economic trends, which includes paying attention to CSMI’s core competencies.
“Am I going to say, ‘I can’t pay my employees because of the economy?’” she asks. “That’s not an excuse!”
PepsiCo takes note of CSMI
In 2003, Eng connected with PepsiCo at a diversity event, and the partnership has continued. CSMI initially worked with the Quaker/Tropicana/Gatorade side of the company but has since moved to the Frito-Lay business.
“I focused in on package engineering and innovation,” says Eng. “The collaboration between supplier diversity, the engineering group, and procurement propelled our organization.”
As a result of Eng’s planning, her thirty-six-employee company has seen annual double-digit growth in revenues.
SAC: seeing trends helps nimble MBE thrive
Solutions Associates Consulting, Inc (SAC, Chicago, IL) has also grown in recent years. Founded in 2006 by Jackie Clark, SAC is a technical consulting and project management company that provides research and development support for the food industry. One of its primary business partners is CSMI. “We teamed up to conduct a study on warehouse worker utilization and improve product placement optimization for a client,” Clark reports. “In four days, we identified improvements and provided workflow options that could save the client over $1.5 million. We also identified issues with personnel safety and ordering of a major ingredient.”
Clark believes large companies manage their overhead more strictly during economic downturns. “They want to make contracts for short-term consulting services instead of taking on three to five-year commitments,” she says. As companies made cuts, this made business available for MBEs like SAC.
Clark has also witnessed a shift in what companies want. “There’s a glut of technical resources in the market and many companies are reluctant to pay a lot for consulting,” says Clark. “Instead of 300 independent consultants in the market doing what we do, now there might be 3,000 laid-off scientists willing to do the task for less. But it would take months to train them.” Clark makes adjustments in response to the market, enabling her to remain competitive. “Coming from a corporate background, I’m able to see the trends before they hit,” she comments.
Each of her twenty-five staff members manages the contracts of several companies. Much of Clark’s business has been from word-of-mouth leads and networking events.
Cisco: get in by knowing where you fit in
Core competencies are important to Cisco Systems, Inc (San Jose, CA). MBEs that want to build brand recognition with Cisco should understand how they can meet the company’s needs, says Madison Gunter, manager for business development and strategic operations.
“Get to know the supplier diversity folks, but also get to know the people who support that core competency at your client’s company,” says Gunter. “For instance, if you’re a logistics provider, it’s good to know who the supplier diversity folks are, but it’s even better to know Cisco’s logistical challenges and its logistics personnel.”
Gunter cautions MBEs to focus on their own core competencies but also to diversify their industry portfolios. Don’t try to be all things to all people, Gunter advises, but “apply your core competency in a number of different industries.”
MBEs that work with Cisco get trained and mentored. Cisco finds MBEs through outreach programs, management development programs like the program offered at University of California-Los Angeles (UCLA), and professional organizations like NSMDC and WBENC.
WWT cultivates multi-level partnerships
MBE World Wide Technology, Inc (WWT, St. Louis, MO) has been a Cisco reseller for more than fifteen years. WWT is a systems integrator and supply chain solutions provider.
“WWT has been instrumental in the development of a number of relationships, including a collaboration among WWT, AT&T; and Cisco,” says Gunter.
As Gunter evaluates the MBEs Cisco will work with, he asks himself, “How do I get them to become ‘that next WWT?’”
The relationship between Cisco and WWT has been so successful that Cisco, which does work for food and beverage company Nestlé (Vevey, Switzerland) through other partners, recommended WWT to work on a major technology project with Nestlé. Dicran “D” Arnold, WWT director of diversity business development in the west region, says WWT was the company to handle the project. “Nestlé could have said no, but they took Cisco’s recommendation and worked with World Wide Technology,” says Arnold.
From two to two thousand
Founded in 1990, WWT has grown from a two-employee startup to a 2,500-employee company that exceeds $6 billion in annual revenue. WWT is now one of the largest MBEs in the country, Arnold says. And as such, this Cisco mentee has become a mentor in its own right, supporting and guiding aspiring MBEs.
“We’ve also had the opportunity to assist a minority woman-owned business. As we’ve grown, we’ve helped them grow. WWT has helped several businesses by mentoring, inviting them to spend a day with our executives, letting them leverage the expertise of our accounting department,” says Arnold.
WWT’s success can be attributed in part to its smart investments in its people, which helped the company navigate the economic downturn. “Seventy-five cents of every dollar we bring in is invested in our people,” says Arnold. The investment has paid off: the company has grown by about $1 billion each year since 2009.
Weldon Enterprise: vendor turns supplier
There are many ways that MBEs can get noticed by large companies. For Markeith M. Weldon, the process began when he was president of IT staffing and executive vice president for corporate sales at the automotive division of WWT. In that role, he supplied services to General Motors (GM, Detroit, MI).
Weldon had the opportunity to work on the GM contract with VisionIT (Detroit), an MBE founded in 1997 that provides IT managed services and IT talent management. That experience gave him the chance to see a well-run MBE firm operate at a key growth stage. WWT helped grow VisionIT and its relationship with GM. His experience working with Vision IT made Weldon an entrepreneur.
“I launched Weldon Enterprise Global IT in conjunction with the MBE-to-MBE partnering that I’m doing with VisionIT,” says Weldon.
Weldon is now a mentee of VisionIT. He was able to leverage VisionIT’s relationships and systems to help his launch, and became a complement to VisionIT’s portfolio.
Weldon Enterprise Global IT is a service-disabled veteran-owned company as well as an MBE. “We partner with VisionIT for fulfillment opportunities, and they partner with us for compliance to help them meet their diversity goals and veteran-owned goals,” says Weldon.
New doors open
His previous corporate and MBE relationships have led Weldon to new opportunities with pharmaceutical company Pfizer (New York, NY) and Ford Motor Company (Dearborn, MI). He notes that his company is a preferred service-disabled veteran-owned small business IT staffing partner for Pfizer and Ford.
“We cut our teeth on the private-sector relationships we had established over fifteen years. We built our performance reputation in the commercial space in our first two years in the market. These relationships are now providing an opportunity for us to go into the federal space,” says Weldon. “We have several clients who would like to partner with us.”
Weldon says that, as a staffing organization, his company felt the hiring freeze during the recession. “It crippled a lot of our operations,” he admits. But when corporations began to hire again, Weldon’s company established a competitive rate structure. Hiring began slowly in 2011 then began rebounding in 2012. Weldon says 2013 was a great year for his company. “We’re establishing our company as a proven source for highly qualified professionals.”
VisionIT builds a successful niche
Weldon Enterprise is one of more than 100 M/WBEs providing products or services to VisionIT. Founded by David Segura in 1997, VisionIT has grown to more than 1,100 employees and 3,000 IT consultants in the United States, Mexico and the Philippines.
VisionIT provides business solutions, mobile technology, IT managed services and talent management solutions to more than seventy-five Fortune 500 companies, and Segura says he regularly gets referrals from industry leaders. Since 2009, VisionIT has been working with and mentoring MBEs such as Weldon Enterprise.
“We attend NMSDC events and provide support at many different levels within supplier diversity circles,” says Segura.
The recession did result in corporate spending restraints in some industries, according to Segura. But VisionIT continued to grow, due in part to the diversity of its business portfolio. Segura says technology is core to a company’s competitiveness in the market, regardless of the economic situation. In a broad IT marketplace any good MBE can find its place, whether it be in security, mobility or other applications.
“I often tell people to build your niche in the market, find what you’re good at, instead of trying to be everything to everyone,” says Segura. “Use geography as an advantage. Know your market segment, and focus on dominating in a specific core area.”
Persistence and patience pay off for SmartIT
Karen Cooper is president and co-founder of SmartIT Staffing, Inc (Indianapolis, IN), an MBE launched in 2005 that provides IT solutions and staffing services. When she thinks about how her work with pharmaceutical giant Eli Lilly and Company (Indianapolis) began, persistence is the first word that comes to mind.
Cooper met Lilly’s supplier diversity team in 2008 at a business opportunity fair hosted by the Indiana Minority Supplier Development Council (now the Mid-States Minority Supplier Development Council, MSMSDC). The following year, at the same event, Cooper met with Lilly’s IT procurement team.
“They were very interested in us,” says Cooper. That led to a meeting with Jamie Samuels, director of IT procurement at Lilly, in 2009. In 2010 a contract was finally signed between SmartIT and Lilly. But the work did not begin immediately.
“We were in the middle of very difficult economic times. We didn’t start working with them until 2012,” says Cooper. Since then the relationship between the two companies has grown, and Lilly has provided Cooper with mentoring and support, as well as guidance in navigating its corporate environment and culture. The first project was successful, and Cooper says SmartIT Staffing is now working on five other projects with Lilly.
“The opportunity for us to grow is huge,” says Cooper. “We’re growing our business within Lilly, and we’re getting validation in the marketplace as a result of this relationship. Our work with Lilly has helped us win contracts with other Fortune 500 companies.”
Cooper says SmartIT grew despite the recession. “We have a diverse client base,” says Cooper. “We’ve always been a lean, flat organization without a lot of overhead. We’re also flexible – we can adjust and adapt as needed by our clients.”
SmartIT Staffing is one of about twenty tier 1 IT MBEs currently working with Lilly. The Small Business Administration reports that the majority of new jobs are currently coming from small businesses, so Lilly considers its company part of the economic turnaround.
“If we’re going to help people get jobs, it’s through doing business with these small businesses, by helping them grow,” says Samuels.
Part of Lilly’s global procurement mission is to make Lilly’s diverse supply base “a source of competitive advantage.” Alan Johnson, director of procurement operations and supplier diversity, adds that Lilly’s supplier diversity program reflects the company’s values.
The company has committed $1 billion to capital engineering and construction projects over the last year, and Johnson says Lilly gives a significant amount of that work to MBEs, particularly in the areas of engineering, construction and IT. “We try to encourage and support local, diverse businesses that will help us compete on a national scale to supply medicines to our patients,” says Johnson.
Lilly works through several avenues to connect with MBEs: chambers of commerce, women’s networks, other pharmaceutical companies, and the MSMSDC.
Kindness and candor: two pluses at Lilly
Samuels says Cooper’s treatment of her employees made SmartIT stand out against competing companies.
“Her philosophy aligned to Lilly values. Cooper talked about the company picnic, she talked about handing out $100 to recognize great work,” says Samuels.
Samuels tells prospective MBEs to show her what they’re good at. “We’re such a large corporation, we probably need what they are supplying, if not now, then in the future,” she says.
Turner Construction: an early leader in supplier diversity
Turner Construction Company (New York, NY) promoted supplier diversity before the term was in common use. Hilton O. Smith, senior vice president for corporate and community affairs, has been with the company for more than forty years.
“We were the first in the construction industry to have a supplier diversity program,” says Smith. “We started in the mid-1960s, long before any legislation was on the books.” He believes that providing opportunities is good for business.
“We wanted to make a change in the construction industry and how it was perceived,” he says. The Turner School of Construction Management was launched in 1969. Since then Turner has held training in 110 cities and has trained more than 30,000 professionals at MBEs and women-owned businesses.
Turner contracts with more than 1,000 M/WBEs a year. Smith says Turner hires some IT companies, but most frequently seeks firms that have construction industry experience, such as construction engineering.
Smith advises MBEs not to rely entirely on any one sector of the economy. “If you’re working for the Department of Defense and there’s a shutdown, that means your business opportunities are stalled,” says Smith. “If all your work is coming from the public sector, you’re missing out on some great opportunities to do business. You must market to the private sector as well.”
In addition to the training offered through the Turner School of Construction Management, Turner mentors M/WBEs directly. Smith says Turner has been building mentor/protégé relationships since the 1960s. “Every small business needs a mentor,” he notes.
COMPANIES INTERESTED IN DOING BUSINESS WITH MBEs
Check website for current listings.
|Company and location
|Cisco (San Jose, CA)
|Designs, manufactures and sells networking equipment
|Eli Lilly and Company (Indianapolis, IN)
|Nestlé (Vevey, Switzerland)
|Foods and beverages
|Turner Construction Company (New York, NY)
|VisionIT (Detroit, MI)
|Global business solutions in mobility, IT
managed services and talent management
|World Wide Technology (St. Louis, MO)
|Systems integration and supply chain solutions
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