Leveraging Silicon Valley's Keiretsu Mindset to Capture Growth Through Diversity

Keiretsu is a post-war Japanese concept and way of doing business. At its root, it is a network composed of entrepreneurs, supply chain partners, and investors who remain financially independent but work closely together to ensure each other's success. In Japanese, the word keiretsu means "lineage affiliated group." In business, the word is often used as a synonym for partnership, alliance. In Silicon Valley it is also called "relationship capital". The analogy between post-war Japan and early Silicon makes it understandable that this would be adopted as the dominant mindset.

This powerful mindset has served Silicon Valley well, economically, for the past few decades. It has created close and efficient relationships between entrepreneurs, employees, investors and suppliers. The results are the greatest wealth creation engine the world has ever seen. It is also rooted in the core idea of homogeneity and mutual interest business pacts among like-minded individuals for mutual benefit. The merit and results of this approach are undeniable, but it is the merit of individuals in a closed pool of a homogenous talent base.

For prospective multicultural employees, suppliers, investors, and business partners, the current universe of Silicon Valley keiretsus represents a substantial barrier to entry and, largely, explains the severe paucity of diverse employees, suppliers, partners and investors in Silicon Valley companies. Diversity requires an expanded mindset that no longer views innovation as mission limited to products and services, but rather includes the ability to innovate in ways that attract, develop and grow people from diverse communities. In short, Silicon Valley must expand its keirestus to make room for relationships with members from minority communities and their networks.

In order to capture the substantial growth through diversity opportunities companies must seed, support and integrate new keiretsus composed of diverse groups. Let's examines several applications of this approach.

1. Broad-Minded Minority Advisory Councils (By Ethnicity). Given America's racial history, every industry faces the integration challenge currently faced by Silicon Valley. The companies successfully growing through Diversity all have Councils comprised of thought leaders and practitioners inside and outside of their businesses that help set strategy, provide feedback and accountability. Professional services firm, Ernst & Young is paving the way in this area. Its Councils have members who are customers, educators, community and business leaders focused on tying its diversity initiatives to superior service for its customers. These members leverage their networks to attract underrepresented minorities into Ernst & Young.

2. Empowered Employee Resource Groups (ERG). In many respects, a sanctioned and empowered ERG serves as the soul and conscience of a business embarking upon a diversity strategy. Empowered ERGs accelerate a company's Diversity strategy since empowered ERGs drive diverse employee recruitment, retention, productivity and help identify and serve the customer bases of the group's members. Turning ERG members into company evangelists will go along way towards Silicon Valley's diversity challenges. Pharmaceutical giant, Merck & Co. is paving the way in this area. Its CEO, Kenneth Frazier, chairs each ERG group, has tied compensation to diversity goals and expanded to nine groups across all geographies.

3. Expanded Depth and Breadth of Recruiting Strategy. Due to its reputation and history, many talented underrepresented minorities do not pursue careers in Silicon Valley. Silicon Valley is losing this war for diverse talent on campuses where it currently recruits to telecommunications, consumer packaged goods and professional service organizations (consulting, banking, law) that enjoy better reputations for diversity. Moreover, because of aggressive financial aid awards and family legacy many talented minorities enroll at public universities and HBCUs where Silicon Valley companies do not currently recruit. This does not mean lowering standards, but expanding the search to find employees that meet the standard. Professional services firm PriceWaterhouseCoopers is paving the way in this area by expanding its concept of who represents a cultural fit and seeking candidates from a broader array of institutions and companies than it has traditionally targeted. This approach allows PWC to tap into networks in underrepresented communities.

4. Develop and Partner with Diverse Suppliers.There are dozens of best of class ad agencies, investment banks, law firms and product suppliers across the spectrum that would add value to Silicon Valley if the supplier process was opened up beyond the usual members of current Silicon Valley kereitsus. Some have proposed a "Rooney Rule" based on the National Football League's policy requiring a minority candidate be interviewed for every head coaching vacancy before a hire is made. While its application should be on a case-by-case basis, the principal of finding diverse suppliers represents a growth strategy. AT&T is paving the way in this area by sourcing and developing suppliers that deepen their relationships in the communities and among the customers they serve.

5. Learn more about Your Own Diverse Customer Base.. Silicon Valley products and services reach every segment and sub-group in the world. A concerted deep dive into existing company data will uncover business opportunities to better serve diverse customers and open a pathway to attracting diverse employees and partners who can help develop and deliver these products and services. Comcast NBCUNiversal is paving the way in this area by launching new diverse program channels and subscription products that speak to the unique viewing and language preferences of the diverse communities they serve.

In sum, every talented underrepresented minority is the product of a community and relationships that aid in their development. This support system represents powerful keirestus that Silicon Valley companies can tap into if they partner with the m to grow their businesses and will pave the way to solve Silicon Valley's diversity problem.

This blog post is part of a series for Paving The Way, a conversation about clearing a path for inclusion and diversity in the workplace. To see all the other posts in the series, click here. To contribute, please email pavingtheway@huffingtonpost.com.