To download the City of Houston MWDBE Transition Report click this link: MWDBE Draft Report
May 4, 2010
The following is the transcript for today’s show:
[Good Afternoon, this is Rudy Sutherland and I am the host of today’s episode of Houston LIVE! I want to say welcome to those of you listening in online and those who have called in. If there is time, I will take questions towards the end of the show.
If you have downloaded this show as a podcast from our archive, I sincerely hope the information is as relevant as when we first recorded it.
First, I want to thank the sponsors of this show, the usual suspects, my firm ALJUCAR & Co., the premier strategic consulting & program management firm in the SBA 8(a) program & Serviced Disabled Veteran Program, Ecchies Uniforms, a women-owned business who’s tag line is “buy direct, for less”; 8(a) certified LinTech Global, who’s tag line is “Business &Technology Solutions that Make Sense”; and, our newest sponsors Project & Knowledge Concepts, an 8(a) certified project & program management powerhouse with offices in Herndon, Virginia and Franklin, NC; AND Meridian Working Capital: whose tag line is “Providing capital today for tomorrow’s growth!”.
I ask that you support our sponsors so that we can continue to bring you timely high quality intelligence and content; and continue to expand our Voice.
I am very excited about this series because of the value I believe it is going to bring to small businesses that are both resident in Houston and also those contemplating a move to Houston.
So, let me start this series out by saying that every major metropolitan city has a Small Business Chittlin’ Circuit. I was recently asked, “why are you calling this series a Chittlin’ Circuit”?
Back in the day - The "Chittlin' Circuit" was the collective name given to the string of performance venues throughout the eastern and southern United States during the age of racial segregation in the United States (from at least the late 1800s through the 1960s). The name is also synonymous with the "Borscht belt" which referred to a group of venues primarily in New York's Catskill Mountains during the 1940s, 50s and 60s.
Back then, the Chittlin' Circuit included Atlanta, New York City, Chicago (my hometown), Washington DC, Philadelphia, Baltimore, Detroit, Austin, Texas, Richmond, Virginia, and Jacksonville, Florida.
So what’s the relevance to the venue of Small Business events held every year at the city, state, and federal levels? Now, as then, there was a need to disseminate information content of sorts for consumption by a discrete audience. In this case, that audience is the small business communities that exist in every major city in the US.
However, over time, the offering has become somewhat overlapping and confusing. More importantly, “Disparity Consultants”, “SDB Certifiers” and “Small Business Development Organizations” have become cottage industries as a result of the continued exclusion of small businesses from America’s most lucrative circles of contracting.
It appears these industries are doing better from the expansion of their market than the businesses they target to help.
Not to say that we don’t need the services that these organizations provide; but how does the small business owner know whether one organization’s services are a better fit than another? It doesn’t seem reasonably practical that a small business owner should be expected to visit all of these organizations or attend every function offered just to gather this intelligence.
Moreover, there is an irony in the fact that many practitioners of free-market principles (small business owners that is) would fall prey to the inefficient, often bureaucratic, model that has been created by the many government entities and not-for-profits that pedal the proverbial “better mouse trap” to get business and survive over each other. Like me, you probably receive emails day-in and day-out inviting you to this function or that function – with the lure of helping you get contracts (or helping your constituents get contracts). When, all the while these organizations no full well that they are in no position to make such guarantees or promises. In fact, depending on your product, service, and industry; many of these service providers can do more to hurt your Brand more than help it.
In short, we must learn to manage all of our resources effectively; and this includes the Chittlin’ Circuit.
Well, this series is designed to clear-up the noise about who offers what; fact vs. fiction; starting with Houston, Tx. Track. So, you ask – why Houston? Well; Houston is about to become the 3rd largest City in the United States – and is a bastion for free-enterprise. But, most importantly, Houston has one of the most confusing offerings of small business support organizations of any major metropolitan city in the country. The theory I espouse is; if sense can be made out of Houston’s Chittlin’ Circuit, the model would be replicable throughout the country. Also, Houston is unique in that it’s newly elected Mayor; Ms. Annise Parker went on record during her campaign declaring a commitment by the City to do business with Houston based firms (small & large)… 1st!
Well, that commitment (heard very broadly) has many firms looking to relocate to Houston, many of whom are clients of my firm - ALJUCAR & Co.
So in my capacity; serving as a Pocahontas of sorts, and in order that they better understand the landscape; I am embarking upon this daunting task of making sense of the small business support framework in Houston so that my clients do not waste their time and resources trying to figure this spaghetti logic out. Nevertheless, I fully recognize (and embrace) that any small business can benefit from this market intelligence – and as a small business evangelist; I am compelled to share.
So here we are.
Now, I shall explain the format of the series, and how the individual organizations were engaged. First, let me say that I did not discriminate when contacting organizations (private or public) to participate in this series. In short, every organization that publicly markets its services (and I have knowledge of) in and around Houston was contacted and invited. And, as I get to the segment that addresses each of these organizations, I will fully disclose their cooperation (or lack thereof) in this process.
This is important, because many organizations make arduous attempts to control their media AND try to stay away from tough questions that would provide the greatest amount of incite into what they do, or don’t do. And, there is a “friendly” old-guard media cycle that these organizations stick to because they know what they will get. “In this regard, this platform is a paradigm shift, because we are accountable not to the coffer of the service providers, but to the small business owners who use our information as an asset on their Balance Sheets.”
That said, let me establish that with the invitations sent, each organization head – all of whom are listed (or will be listed) on our information blog @ 8vsb.wordpress.com, was provided with the list of questions that would be posed to them if they committed to participate. The following are the preliminary list of questions that were stated to be posed:
- What is the mission of your organization?
- Why should small business owners be interested in your organization?
- How does your organization affect the business operations and/or advocate on behalf of small business members?
- What does your organization do for small businesses outside of your paid membership?
- What does your organization require of its members?
- What is your progress to date in accomplishing your mission?
- Who is eligible to be a member of your organization?
- Who chooses whether a small business is allowed to become a member?
- What will being a member of your organization entail?
- What voice does a small business have in the direction and focus of your organization?
Needless to say, many of the organizations who might have thought this a tremendous marketing opportunity initially, dialed back from the venue once they read the question-set. I fully expected this – and knew only those organizations that fully embrace transparency, and desire to be held accountable, would fully participate. Now to be fair, many of the government entities (by virtue of statute or conflict of interest) were not able to be guests on the show because of current or prospective commercial activity with my firm or clients; and I will point that out when get them in the series.
And so we begin…
We start this series off by taking a candid look at the City of Houston and its thought Leader, Mayor Annise Parker. The Mayor of Houston sets the tone for small business of all stripes by virtue of the directives given to department heads of each city department. The new Mayor, Annise Parker, commissioned a transition team to make recommendations on the Small Business framework of the city – which all involved concede is broken to some degree. I will now discuss in more detail those recommendations which will set the tone for the shows to follow in this series. However, make no mistake about, we can talk until the cows come home; but, as one of the esteemed transition team recently stated; “the most important part is the implementation phase.”
So, let’s get started.
When I contacted the newly elected Mayor’s office to request information on the work performed by the transition team – I was promptly provided a draft presentation from Ms. Janice Evans, Director of Communications. Let me say that what I read, and will be sharing with you today – and post to the 8-PAC News aggregator, is absolutely on point; these folks get it… and they got it mostly right.
The members of the transition team deserve to be noted for there public service, as many times is not the case for those who selflessly give of there time and resources.
These individuals are:
- Renee Logans
- Truman Edminster
And, Task Force Members:
- Binh Ho
- Carmen Watkins
- Cindy Clifford
- Dick Huebner
- Felix Chevalier
- Harold Underwood, Jr.
- Hector Carreno
- Judy Aiello
- Ramesh Gunda
- Val Perkins
I would like to congratulate these individuals for their efforts on, in my estimation, a very good baseline assessment of the current state of MWDBE (Minority, Women, and Disadvantaged Business Enterprises) CONTRACTING in Houston. At some point in the future, I will commit a show to asking the question, “what is the definitional difference between being Minority, Women, and/or Disadvantaged”. But for right now, let’s just accept this acronym at face value.
Throughout the series, I will also address the question of why do the folks who get the least amount of business, and have the least resources; find themselves needing to expend precious resources to be “certified” and utilizing “house advocate gatekeepers; while my White-male owned business colleagues who are getting most of business need only pick up a phone and call the department they wish to do business with – but, I digress…
In the draft report, the following fundamental tenant of administration is established for the Mayor:
- Ensure that MWDBE Firms are better off at the end of your administration than they were at the beginning
And, an interesting statistic is cited; - since inception in 1984, over $4.1 billion awarded to MWDBE firms (an avg approximation of $158M, ~ 1% of the total annual spend by the City over this time); and in 2009, $293 million out of $1.5 billion was spent by the City (~2%). So, that means that 98% of the dollars spent by the City of Houston, ~$1.2B, in 2009 was with Large & Small White-male owned firms. So here is my question, “Is this discrimination on the part of the City of Houston or are Minorities & Non-Minority Women simply incompetent?
But, again I digress – more on this topic in a future show.
In this regard, the question that the transition team poses in several ways is WHY? Now, although the transition team does not make an attempt to answer this question, because the answer is outside the scope of their study - I will.
Before I begin, and for full disclosure to those of you that do not know me; let me state that I am a Black-man – and I have been one all of my life. However, I do not claim to be a victim of my being Black and also do not choose to accept the “Brand” of being a minority or in the minority by virtue of my skin color. I am, in fact, in the majority of being an American born citizen – and on the cutting edge of thought management in our country as it pertains to Entrepreneurship. I am a service disabled veteran of the Gulf War and I have been a practicing Entrepreneur for more than 10 years.
This established, I posit that the reason WHY so few products and services have been purchased by the City of Houston from the MWDBE small business community is that: MWDBEs, by virtue of being Branded as such, are herded into spending more time addressing and certifying their victim status than selling DIRECTLY to Departments within the city like their White-male counterparts. Also, many of you may not know this – and it is not frequently discussed - but the City of Houston by Ordinance focuses only on achieving sub-contracting goals and have no prime-contracting goals for MWDBE certified firms.
Furthermore, and to be clear – sub-contracting work does not build capacity, prime-contracts do.
So, if you are lucky enough to get sub-contracting work and then graduate from the MWDBE program; you then fall into the deep end of the pool where you must now compete with Large & Small White-male owned firms who have been investing their time all along building relationships with key decision makers; not small business gate-keepers.
Finally, at all levels of government; I have spoken with Black & White department heads and contracting officers who (right, wrong, or indifferently) resent the fact that they MUST do business with this Brand of small businesses called Minorities and often can’t see past the Brand to the quality of the service or product offering. Whether this is right or wrong, it is what it is.
Thus, as a small business owner; when you get your MWDBE certification, it symbolizes an umbrella over your company Brand before you can even establish it. This is a sober truth.
To prove this, a little while back I conducted an experiment at the federal level. My firm submitted the capability of a portfolio of Minority firms with excellent credentials under the JV umbrella of a black Prime contractor and then a whiter contractor with equivalent background and past-performance for the same opportunity. The JV with the white contractor made the short list and subsequently won the contract; the black firm didn’t even make the short-list – I subsequently scheduled a debriefing for the black contractor. At the debriefing, when I informed the black contracting officer about the fact that the past performance was virtually identical, yet the black owned JV didn’t even make the short-list; he had no explanation. We subsequently protested all the way to the GAO – but the point was made.
The point I am trying to make is that ALL businesses are tied to the Brand established through marketing, which is a primary form of business communication. Control over one’s Brand is critical to growth. Yet, in the case of the MWDBE, you carry with you the prospective stigma of being a victim and are subject to resentment through the annexing of the MWDBE Brand. Moreover, once established it is almost impossible to eliminate the annexation. As a matter of fact, many MWDBEs go to the extreme length of changing the name of their firm once they reach a certain level of success, so that future growth is not inhibited.
Now, by saying what I am saying; I may be rubbing the folk who make money off of the perpetuation of the minority Brand the wrong way. Do I care? No.
Because, I believe if they looked objectively closer; they would recognize a bigger opportunity staring them in the face. But again, I digress; this is fodder for a future show.
Back to the Transition team’s report:
The team recommends to the Mayor that she establish a clear, concise Mission Statement and establish clear lines of Authority and Accountability; from the Mayor, to the Affirmative Action Director; down to Staff. They also recommend teaming between initiating Departments, PM + AA + Legal at inception of contracts to set goals up front and modifications to the award process. Finally, they recommend a software update.
While I say bravo to the authority & accountability, but am indifferent to the software update – no investment should be made in tools until the operational fundamentals have changed. My recommendation is that Authority & Accountability be established by Ordinance so that it will be lasting.
But YOU say, authority to whom? Ahhh good question -
The Transition team puts forth 2 options –
- The 1st option is to retain, retrain, and empower the AAD, but require the Mayor to be fully engaged and enforce leadership.
- The 2nd option provides for a "Paradigm Shift" - a new energy and respect for the AAD; akin to that which I stated in my show back in February, “A Proposal of Change | Performance Based MWBE Program for Houston”. This option also includes a Re-naming/Re-branding of the Compliance function.
My recommendation is that the title Affirmative Action Director should be done away with and replaced with Director of Small Business Performance (or an equivalent), and Authority be given to the Director by Ordinance so that position has the full power and authority of its peers within the CoH hierarchy. However, I agree with the transition team that compliance should be driven by process and NOT Ordinance.
All this said the transition team summarizes and I concur: Madam Mayor, ACCOUNTABILITY WITHOUT CONSEQUENCES IS FUTILE - IT STARTS, AND ENDS, WITH YOU.
We will see what the Mayor decides to do, and I will dedicate a future show to that announcement.
Ok. So now we know what the Mayor’s decision framework is - and we have an idea of the macro options for the City; but what about the other two legs of this three legged stool; the private sector service providers and the government entity service providers? Well, get you pen and paper ready because it is my hope that this one of the most informative series of this type ever. Again, my goal is not to provide my subjective perspective on these organizations, but to provide consistent objective facts and let you decide the merits thereof.
So again, I want to thank the sponsors of this show, the usual suspects, my firm ALJUCAR & Co., the premier strategic consulting & program management firm in the SBA 8(a) program & Serviced Disabled Veteran Program, Ecchies Uniforms, a women-owned business who’s tag line is “buy direct, for less”; 8(a) certified LinTech Global, who’s tag line is “Business &Technology Solutions that Make Sense”; and, our newest sponsors Project & Knowledge Concepts, an 8(a) certified project & program management powerhouse with offices in Herndon, Virginia and Franklin, NC; AND Meridian Working Capital: whose tag line is “Providing capital today for tomorrow’s growth!”..
I ask that you support our sponsors so that we can continue to bring you timely high quality intelligence and content; and continue to expand our Voice.
Until next time, have a great afternoon.]