“We looked, but we couldn’t find any companies to acquire led by women or founders of color.” “I want to hire diverse talent, but it’s impossible to find.” “It’s not my fault that the financial sector doesn’t have a more varied talent pool or deals to make with non-white males.” I have heard all of these reasons, and more, from various leaders trying to justify the lack of diversity in their investment portfolios and business deals or leadership teams. Although I’ve heard many excuses, my response is always the same: “Walk me through your process so I can identify the weak link and figure out how to improve your results.”
For over two decades, I’ve been helping leaders be deliberate about creating new business opportunities at the intersection of diversity, inclusion, and innovation. The common thread in every situation is that the leader simply didn’t know about the hundreds of individuals and opportunities that they were missing. I call this the “Connectedness Curve,” or the gaps in your process that the right effort, or the right person, can fill with a combination of expert knowledge and access to a thriving network. I’ll explain in greater detail what the Connectedness Curve is, but first, it’s important to note that I’m not suggesting that the diverse circles of influence or database that took me 10 years to build is somehow easy to come by. It’s not. Building a 5,000-person pool of black subject matter experts, 2,000 organizations, and an 80,000-person ecosystem (and the methodology to add and extract value) takes time and sweat equity. It takes a person dedicated to (OK, obsessed with) finding the resources that, frankly, are hiding in plain sight. But the good news is, they exist, and there are people and organizations out there devoted to finding them.
The point I’m trying to make for venture capitalists and those in private equity or leading merger and acquisition efforts is that diverse leadership is possible, and deals by women and people of color are out there. They are out there in large numbers and they are providing big returns to the financial leaders who are deliberate in finding them. According to the Harvard Business Review, “a study conducted by the Small Business Association determined that venture firms that invested in women-led businesses had more positive performances than firms that did not.”
I wouldn’t expect any executive to know about this gold mine unless they’ve devoted sufficient time to researching, aggregating, and connecting to the powerful networks and ecosystems that already exist. Hiring someone to establish and mine the databases for talent and deals isn’t always a guarantee either, as many well-intentioned leaders end up relying on the wrong someone. You may find a person with an excellent strategy who doesn’t have the network to make the connections. Or you could find a person with incredible connections who can’t implement an effective strategy. You need someone on your team with both the knowledge and the network, even if this requires two different experts working together to help you bring diverse talent and deals out of the shadows and into your business and portfolio. So when you say you “can’t find any,” might I suggest you replace that phrase with “we haven’t been deliberate enough.”
In 2015, the founder of Burning Man, Larry Harvey, was interviewed about his experience with the diversity consultant who he hired in an attempt to bring more racial parity to the historically whitewashed festival. The consultant created a comprehensive strategy that Harvey was ready and willing to execute. But Harvey’s attempts at inclusivity hit a significant roadblock when the consultant herself wasn’t in touch with the diverse networks necessary to bring the brilliant strategy into practical reality. Even though she was a black lesbian herself.
Unsurprisingly, successful networking on its own is a microcosm of the larger idea of deliberate intent in progressive leadership and investment acquisitions. According to experts in the field, successful networking requires an understanding that you aren’t simply “selling yourself”—indeed, networking is more about understanding everyone else and what they have to offer, rather than knowing how to pitch what you have to offer. Similarly, mining for diverse deals and talent necessitates an authentic knowledge of and connection to diverse networks. Networking must further be understood as a science, rather than an art, one that requires a deliberate game plan and the implementation of it. As noted by scholars of the science, “Successful networking requires thorough preparation and a clear strategy.” Sound familiar? It should!
To bridge the gap between strategy and network for leaders looking to expand their inclusive recruitment, I developed the Connectedness Curve after consulting over 200 clients over the last 20 years. While I recognize that venture capital and private equity firms looking for diverse deals and people haven’t devoted the man hours to achieve the goal, the point is that with deliberate action to curate new diverse and powerful ecosystems and the acceptance of the fact that they exist in large numbers, leaders can find what they’re looking for, or the appropriate experts to help them get there.
I just got off a call with a very large and very powerful venture fund leader and he loved the idea of being deliberate. When I asked him the question about his process to be more diverse and inclusive, he realized that his fund’s lackluster results as far as inclusive recruiting could be tied directly to a lack of deliberate intention, and for that matter, proper oversight. Diversity and inclusion doesn’t just mean the next generation of kids graduating from college or access to tech education in preparation for the 4th industrial revolution—like coding and other skills—but who is seasoned and accomplished in the market today that can help companies grow their top and bottom line. How can the field expand to serve both an evolving society, and a growing financial organization? If you’re a leader in VC or private equity, it’s time to stop making tired excuses and start making real progress.
