Creating Diverse Supply Chains Helps Strengthen Economy

REDMOND, Wash., Oct. 13, 2004 — Last week, Dialogue on Diversity, a nonprofit educational organization targeted toward entrepreneurial women, honored Microsoft Director for Supplier Diversity Winston Smith with the organization’s annual Global Diversity Award in recognition of his pioneering efforts in the design of diverse supply chains.

According to U.S. Census Bureau statistics, the population of the United States is projected to grow to 394 million by the year 2050 — and the minority population will account for nearly 90 percent of this growth. Yet minority-owned businesses continue to be significantly fewer than minority representation of the U.S. population. The nation’s 23 million small businesses currently produce half its goods and services and create most of the new jobs, according to the U.S. Small Business Administration. Considering these factors, it becomes increasingly important to extend the benefits of technology to more people and businesses, encouraging minority business growth and success.

Winston Smith, Director for Supplier Diversity, Microsoft

PressPass spoke with Smith about the strides minority- and women-owned businesses have made, the challenges they face, and why such businesses are the lifeblood of the nation’s economy.

PressPass: What is at stake in the overall success rate of minority-owned businesses? How do they impact the economy?

Smith: We know from the U.S. Department of Commerce that small businesses overall represented about 70 percent of the new jobs created during the past 10 years. And while we witnessed growth in small businesses overall, the success rate of minority enterprises still lags behind that of non-minority businesses. In addition, as we hear in the national and statewide political dialogue, job creation is critical to our communities and vital for our national economy. It is essential for minority-owned businesses to succeed because these companies are central in the front of employing minorities and infusing capital into underserved communities. Putting more people to work also means increased revenues circulating in minority neighborhoods — which has an impact on local public services, including public schools and public works.

PressPass: What are the implications of a healthy and thriving minority-business population in the U.S.?

Smith: The most important component of this relates to your first question: job creation. As I said, small businesses overall play a critical role in creating and maintaining jobs in communities that need them the most. Another positive effect of a thriving minority business community is a legacy of entrepreneurship — in essence, creating a pipeline of successful minority business leaders and community stakeholders who use the resources of their businesses to positively impact their communities.

PressPass: What are some of the challenges that minority-owned businesses face today? What do they need to realize their full business potential?

Smith: Many challenges exist in the minority-owned business universe; however, one of the most important is ineffective technology utilization. Based on research conducted by Microsoft and the Urban Institute, we learned minority-owned businesses are falling behind in adopting and implementing information technologies for important business functions. If we can reverse that trend, between US$100 and $200 billion per year can be fused into the economy, and on the average minority-owned businesses can experience a $100,000 gain to their bottomline. In addition to increasing technology usage among minority-owned businesses, Microsoft is creating diverse supply chains within the company and continuously increasing our procurement of goods and services from the minority-owned business segment.

PressPass: Can you describe some of the efforts Microsoft has made to encourage minority-business growth?

Smith: Microsoft aims to be the nation’s most valued technology partner for ethnic- and women-owned businesses by helping them realize their full potential. For the past four years, Microsoft has mobilized key stakeholders from government, media and community towards delivering national and local solutions that we believe will make a measurable difference in the success of the minority business population.

There are three types of initiatives Microsoft has developed to help minority-owned businesses gain access to technology & resources that will help them grow their businesses:

  • Hands on learning : In 2001 and in 2004, Microsoft commissioned national research to learn how technology can help increase the productivity of minority-owned businesses. Following both studies Microsoft developed and evangelized solutions that address the barrier to technology use faced by these businesses. Our solutions included the award winning Build Your Business Tour (BYBT), a multi-city seminar, aiming to educate minority and women business owners on how technology can help their businesses improve productivity and grow and more recently the formation of the cross-sector Technology Partnership for Small Business Taskforce which is charged with developing additional national solutions.

  • Access to capital : In 2002, Microsoft announced a $3 million loan program with the Business Consortium Fund. The Business Consortium Fund provides access to capital to minority business enterprises (MBEs), certified by the National Minority Supplier Development Council, that are unable to secure financing on reasonable terms through traditional lending channels. In addition, Microsoft is exploring ways to expand its diverse supplier base and provide direct investment for MBEs and WBEs.

  • MS business imperative: At Microsoft, we are working to support small businesses by delivering innovative, affordable solutions, tools and services to help them reach their goals. In March 2003, Microsoft announced a new division called Small- and Mid-Market Solutions and Partners Group, which focuses solely on the needs of these customers and includes a) delivering technologies designed to meet small businesses’ specific needs; b) empowering our customers by better understanding their unique needs and demystifying technology; and c) offering a network of partners which serve as local resources.

In addition, the Microsoft Vendor Program (MSVP) was created to make it easy for Microsoft employees to work with pre-qualified, select groups of companies. All companies interested in working with Microsoft should visit

PressPass: Has Microsoft made efforts to cultivate young people’s interest in entrepreneurship?

Smith: In FY04, Microsoft launched a new program called Making the Business: Youth IT Challenge in partnership with the National Urban League, a national program to encourage entrepreneurship and technical proficiency in minority high school students. Minority high schoolers work with Microsoft instructors supported by volunteers from Microsoft, local Urban League offices and the community to develop a business idea and write a business plan, which goes into a national competition. The winning team receives $15,000 in prizes.

Microsoft is also a long time supporter of NFTE (the National Foundation for Teaching Entrepreneurship), contributing more than $3 million in cash and software over the past three years to fund BizTech and other programs. Since its inception in 1987, NFTE has educated over 23,000 students across the country and internationally on how to develop and operate their own legitimate small businesses.

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