What You Do, Depends on What You See To Do

Representation matters. In the aftermath of President Obama’s first victory, the Black community celebrated, among other reasons, that their sons and daughters could genuinely believe that they could accomplish anything. As a community we celebrate our ‘Firsts’ across the spectrum of life because they do in fact blaze a trail for others in our community.

This is not a phenomenon unique to the Black community. It is an aspect of  human behavior, though it is perhaps more relevant to the disenfranchised because of their lack of representation in so many environments. Quite simply, mankind is a “monkey see, monkey do” species. Research has shown that what we see, and experience helps shape our expectations, and those expectations help frame our behavior. For example,, “people who wear taller, better-looking avatars in virtual reality behave in ways that taller and better-looking people tend to act.” Representation matters in education. It matters in films and media. It matters in politics and careers. It also matters in business.

In celebration of Black History month, the National Business League (NBL) partnered with the United States Patent and Trademark Office (USPTO) to feature the Black Innovators in  history. While like all in the Black community the feature instilled great pride and admiration in what these great men and women accomplished against such great odds. Unlike many perhaps, I also felt great anger. I could not help but feel, where’s our check? Where’s our AT&T? Where’s our Ford and IBM? There were not transitional (community uplifting) Black businesses garnering the economic value reflective of the value these products and technologies of these Black Innovators created for society.

The first 1500-meter race of global significance in modern times was run in 1888 in France in a time of 4:33. At the turn of the twentieth century, it was thought that shaving off a minute from this time was beyond human capabilities. That is until Jim Ryan ran 3:33 in 1967, seventy-nine years later. There are a plethora of programs designed to increase the number of Black businesses, or to help Black startups to grow, perhaps it is time to establish programs and agendas to aid the Black community’s most successful businesses to break that ‘business four-minute’ threshold: the Fortune 100. Looking at the various 2023 Fortune business lists, it requires 43 billion in revenues to make the Fortune 100 list, $6.4 billion to cross the Fortune 500 threshold, and $2.1 billion to enter the Fortune 1000 list. Currently World Wide Technology with revenues of 11 billion in 2022 is closest, as its revenues allow it to be placed among the Fortune 500 companies. Act 1 Group with revenues of 2.8 billion in 2022 allowed it to qualify for the Fortune 1000 list.

The objective is not for these, and others, to exceed these thresholds so that their highly successful and wealthy owners become even more wealthy and successful. The Black community needs these thresholds exceeded so that our perceptions change, and expectations broadened. Not all business growth is the same. Looking at its magnitude, and the scope of its impact, there are three types of growth: transactional, transformative, and transcending. To significantly move towards elimination of the wealth gap, it is important for Black businesses to understand the distinction between these types of growth and gear their expectations much more towards the latter.

Transactional growth is incremental in its nature. Unit sales and revenues increase less than 5% from year to year, typically in line with their respective industry’s business cycle, and always within the boundaries of the company’s capabilities and capacity. For example, only six of the BE top 100 Black businesses in 1973 remained on that list in 1993. Allowing for name changes, buy-outs, acquisitions or mergers, this is still a significant drop-off in less than a generation. Of those companies on the BE 100 list in 1993, twenty-three remained on the list in 2003, but only eight remained in 2013. The firms dropping off this list in a generation or two manifested transactional/incremental growth. While they may have remained successful or profitable, the appearance and then complete disappearance of these firms within two decade suggests their growth was driven primarily by the overall growth of the market or an ascending and then descending business cycle. Firms would have had to have average growth rates between 12% and 14% (transformative growth) to have remained on the list. In this case increases occurred in terms of their transactions, but not in terms of their capacities and/or capabilities. When these firms could not scale their capabilities or capacities, reach new markets, or innovate their product line, then when the business cycle or market turned downward the growth of these firms and sometimes even their viability waned as well. These firms undoubtedly positively impacted their owners, employees, and their families, but they had no impact on their respective industries, and certainly not the overall economic well-being of their communities.

Transformative growth is structural in nature. These firms can sustain 7% to 12% growth over several decades. They can maintain growth across several business cycles and ups and downs in their respective markets. Though not accelerated (greater than 15%) this type of structural growth over time suggests expansion of capacities, capabilities, and resources.

Unfortunately, few Black firms can achieve this type of structural growth. An examination of the BE Top 100 Black business lists from 1973 to 2015 revealed that less than ten percent of the firms appearing at some point on the BE top 100 remained on the list beyond 2 decades. A couple of the rare exceptions were the H.J. Russell Company (50 years and counting), and the Johnson and Johnson Publishing Company that had a 76-year run.

Transitional growth occurs when a business sustains accelerated growth and market dominance over an extended period time such that it becomes the economic tide that lifts all boats in a community.  The following headlines provide examples of transitional growth:

·       Nike                                   “Nike adds nearly $2 billion annually to the Oregon economy.”

·       Google                               "In 2021, Google helped provide $22.7 billion of economic impact on the San Francisco/Silicon Valley area.”

·       Eli Lilly                                “Eli Lilly has a significant impact on both the size and the growth rate of the Indiana economy and the Indianapolis-Carmel metropolitan statistical area…every dollar spent by Lilly produces, on average, almost $0.58 in additional economic activity.”

·       Tyler Perry Studios              “Tyler Perry Studios help Georgia film industry generate a$9.5 billion economic impact in fiscal 2017.”

·       World Wide Technology      “World Wide Technology inks deal to make St. Louis a racing destination and draw millions in tourist dollars into community.”

As the expectations of Black businesses change and broaden many other Black businesses will grace the Fortune 500 and 1000 lists, and the Fortune 100 threshold will fall as quickly and as frequently as the four-minute mile. The vision being that economic impacts like the examples above will occur in Black communities across the country. One of the many programs of the National Black Supplier Development Program is to help facilitate Black businesses exceed these thresholds. Representation matters.