During the year of 2020, public outcry for racial equality exploded. Stories of injustice dominated social media feeds for months. The desire for equity goes beyond Twitter: 70% of Millennials are choosing to shop with brands that demonstrate diversity and inclusion. 60% of people say the way a brand reacted to the protests in summer 2020 would influence buying decisions in the future. The summer season was a time when companies promised more diversity; it’s time to follow through.
Prior to public outcry, the 2020 pandemic disrupted supply chains around the world. 97% of global companies were impacted by supply chain disruptions. Relative lack of bargaining power spelled the worst trouble for small businesses. Of all the business closures that occurred during the pandemic, 60% are now permanent. In February-April 2020, months before the struggle for racial justice dominated national conversation, minority business ownership declined nearly twice as much as white business ownership. The greatest damage was done to Black Americans, who suffered a 41% decline.
These economic tragedies are more than just personal losses for the owners and their employees. According to Robert Fairlie, Professor of Economics at the University of California, Santa Cruz, these rampant closures are a setback for racial equality. Dr. Fairlie explains that minority-owned businesses are important because of the local job creation, economic advancements, and longer-term dents in wealth inequality they provide. While national discussions about race did bring attention to minority-owned businesses, many firms were not able to take advantage of the new spotlight. They’d already closed their doors to customers.
Diversity isn’t just a media trend. It goes beyond the confines of social media. Diverse workforces achieve more innovation: more new patent filings, product upgrades, and more citations on patents. When businesses use local suppliers (including those that are minority-owned), whole communities see the difference. 2020 was a terrible year, but it brought a great number of necessary changes to light. “When we get to the other side, companies are going to be operating differently,” according to Mark Cuban. Diversity compliance is out: embracing supply chain diversity as a successful business strategy is in.