Corporate Feature

A New Day at Microsoft for Social Justice, an Inclusive Supply Chain and Racial Equality

Microsoft’s CEO has set the bar high for increasing representation and inclusion of the Black, African American and minority community members and businesses in society and the workforce. The new initiative is built on the use of data and technology to finally bring real and transparent change for social justice and equality.
— By Betty Armstrong

Microsoft’s CEO Satya Nadella sent an email on June 5, 2020 to Microsoft employees that was a clarion call for social justice and equality in the world. He followed it up June 23, 2020 with more details in which he makes the company a leader in affecting real change by relying on a foundation of data and technology. There have been calls for change leading to more inclusion of African Americans and other minorities in tech companies in the past, but this time there is a notable difference. In the words of Fernando Hernandez, Director Supplier Diversity and Sustainability for Microsoft, “Satya is addressing the desired change with a true business approach. To have an impact in business, there must be clear goals, a clear strategy, clear program, and clear commitment as to how you will execute, govern, and measure success.” The Microsoft business approach to working towards racial justice is a three-pronged multi-year sustained effort with specific commitments and goals to improve Microsoft’s representation and culture of inclusion, strengthen engagement of suppliers and partners to extend the vision for societal change, and utilize data, technology, and partnerships to improve communities.

Massive Change Effort
The Microsoft initiative for pursuing social justice and equality is an enormous corporate commitment. It has many pieces that add up to at least a billion dollar commitment to drive change. The difference between this effort and prior efforts is that specific goals and supporting strategies are established which enables measurement of progress. Unlike many corporate efforts across the industry in the past, there will be no manipulation of numbers to make the company appear to be making progress. Each of the efforts in the three-pronged initiative will be intentional, goal-driven, measured, and transparently reported.

"Satya is addressing the desired change with a true business approach. To have an impact in business, there must be clear goals, a clear strategy, clear program, and clear commitment as to how you will execute, govern, and measure sucess." — Fernando Hernandez
The representation and culture prong of the initiative includes a $150 million investment in Diversity & Inclusion to double the number of Black and African American managers and senior leaders by 2025. It requires employee training on allyship, covering and privilege in the workplace and live sessions for CVPs and EVPs to help leaders understand the lived experience of specific communities. There will be a strengthening of intentional career planning and talent development efforts, and above all, accountability across the enterprise.

The second set of goals addresses the ecosystem of partners and the supply chain. The goal is to experience $500 million incremental spend with Black and African American-owned approved suppliers over the next three years. There will be a $100 million program in collaboration with the FDIC to increase access to capital for minority businesses; a $50 million investment fund to support Black and African American-owned small businesses; a $50 million partner fund to grow the number of Black and African American owned partners in the US by 20 percent over the next three years. In addition, $20 million will go to existing and new partners to support cashflow needs, and $3 million will be invested in training programs covering financial management, tech solutions and go-to-market readiness.

The third prong of the initiative addresses communities by committing to putting the power of data, technology and partnership to work to improve the lives of African American and Black citizens. The existing justice reform initiative will be expanded through a 5-year, $50 million sustained effort. Data and digital technology will increase transparency and accountability in the justice system, support public policy advocacy by identifying racial disparities to improve policing, and support evidenced-based and unbiased diversion programs to promote treatment alternatives and promote racial equity in criminal system decisions. Microsoft will support expanded skills development, high school computer science education programs, computer and data science programs at Historically Black Colleges and Universities, and expansion of access to broadband and devices for communities of color and the major institutions supporting them in urban centers. Finally, Microsoft will increase technology support for nonprofits that support people of color.

From Good Intentions to a Laser Focus on Results
This massive commitment and undertaking will only succeed through the tireless efforts of corporate leaders like Fernando Hernandez. For his area of supplier diversity, Fernando has already designed a strategy. “We are going to be intentional about who we buy from and will motivate our first tier suppliers to get them on board and hold them accountable. Their efforts and progress will be measured and tracked to keep the focus where it belongs.” It is the intentional focus across the enterprise that will make the difference this time. “If you look at the Human Resources side, for example,” says Fernando, “the $250 million initiative will not be spent in a random, arbitrary manner. There are specific goals and a variety of ways to meet those goals. To double the number of African-American employees, HR can use data to look at regional differences. If we bring more African Americans to Seattle from Chicago, New York, and Atlanta, the relocation and training budgets are increased to ensure a successful transition.”

All roads in the Microsoft initiative lead to using data analytics and technology to drive real change. Fernando points out the lack of progress in representation and inclusion in Fortune 500 companies and the tech industry is due to them tolerating a 4-5% participation of African Americans in their respective workforces. Using a business approach and a statistical perspective, a business should look at the market and the group’s percent of the population to determine a baseline. From there, further analysis determines if 4 % is adequate. If not, address it as a business question, and set a reasonable goal, measure progress and hold people accountable for results. “This is Satya Nadella’s approach. He is approaching the initiatives as business imperatives which in the past was good intentions. As a company we are now laser focused.”

Preparing for Change
Microsoft’s leaders are thinking through the best strategy to ensure real change occurs this time. For supplier diversity and community advancement, the first steps include making sure its partner support organizations, like NMSDC and WBENC, and its partner businesses are prepared in terms of access and utilization of technology. Fernando is asking a lot of questions to ensure the organizational and business partners are ready to maximize the advantages the Microsoft initiative offers. Do all the partners have Office 365? Are the partners in the cloud so they can work no matter where they are? Do they have access to Teams so they can collaborate and connect? How can Microsoft successfully add another half billion dollars in spend with African American businesses to the supply chain?

Fernando explains, “It’s going to be a massive undertaking. But we are up to the challenge because society needs us. I have always pushed hard, but now I will push harder. Now I have the commitment of senior management, the Microsoft brand, the Microsoft balance sheet, ability to access technology, and the fact it’s now across the entire enterprise, including the partner community, Human Resources the supply chain, and the community. Everybody is on deck and headed in the right direction.” The commitment of resources from the top is crucial to the ability to make a difference in the world.

Data Means Nowhere to Hide
No more hiding. In the past, many companies refused to provide a breakdown of minority participation in any area to avoid criticism. Microsoft will apply things like deep learning and Artificial Intelligence using FS 500, a tool to ensure there is no way to hide. Fernando’s hope is that other corporations adopt the same tactics so opportunities and inefficiencies are discovered, leading to making necessary changes. It is dynamic reporting that will make a big difference.

As far as the future of the supply chain, a lot will change there too. Digital procurement will create a different environment with automation discovery. The traditional RFP process will disappear because criterion and weighted attributes will be fed to a bot. The bot will search numerous databases and return dynamic data. The RFP is likely to cease to exist. “We must help diverse firms get ready for what is coming,” says Fernando. “They must be discoverable if we are to reduce racial bias.” This is true for all systems, from HR to the criminal justice system to communities. Data will enable real change once and for all because it will make all the elements working against Blacks, African Americans and minorities transparent.

CEO Satya Nadella presented a vision with these words, “We will use our balance sheet and engagement with suppliers and partners to extend the vision for societal change throughout our ecosystem.” Finally, a future that truly looks inclusive.