Dan Morrell: In the wake of the Rodney King riots in Los Angeles in 1992, Willie Woods (MBA 1993) was part of a group of HBS students who traveled to the city with their Competition and Strategy professor Michael Porter. The group thought it would be a good opportunity to take some of Porter’s ideas about what makes a nation competitive and apply those on a city level. Two organizations spun out of that experience: The Initiative for a Competitive Inner City, a nonprofit focused on improving urban economies, and ICV Partners, a Black-owned private equity firm focused on companies in the lower middle market.

Willie Woods is cofounder, president, and managing director of ICV Partners, and in this episode of Skydeck, he talks to contributing host Chitra Nawbatt (GMP 6, 2009) about what it takes to make real change to the diversity of your organization.

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Chitra: You've helped build companies, build people, processes, and systems at scale. So what has to be different to bring real substantive change at scale, especially at the senior executive and board level ranks?

Willie: I think what has to be different today is acknowledgement. You have incidents that get captured on camera. Everybody makes announcements. Everybody says they're going to do better and eventually nothing happens, but what may be different this time is that people—after that George Floyd moment —have really internalized that vision of that. And are now doing work to really understand what's behind this. Does systematic racism really exist and why? CEOs and others have to look in the mirror and simply make the acknowledgement that it exists and it's not some figment of people's imagination.

So after acknowledgement, because I think acknowledgement is key, but then the next thing you got to do is assessment. You got to be willing to do an honest assessment inside your organization, like you would be doing if you were thinking about launching a new product, you will be assessing your organization's capabilities.. Have you really been doing a good job? How many people do you have of color? How many people in the senior ranks? How many people have you recruited?

That business assessment, you got to do that next. And then third, you've then got to execute. Put together a team—a very capable team, like you would if you were launching a new product—who will be focused on designing a plan and a strategy around how are you going to make these improvements and how you're going to do it at scale. And then you’ve got to hold that capable team accountable for results and goals, just like you would do any other business matter.

Chitra: And when leaders may say to you, "Hey, you know Willie, but I've got this chief diversity officer—we've been trying to do this for 20, 30, 40 years through HR or through chief diversity and inclusion offices." What would you say to that? Because there's still a gap in terms of getting those results at scale.

Willie: I think that's window dressing and lip service. Chief diversity officers are set up as people who are trying to solve a problem. But most times those people have no power. They have no authority. They have no resources. The approach I'm talking about is a team. A really capable team who's got real authority and stature inside the company, who's putting together a real plan with real goals that are going to be held accountable based on compensation, just like you would be doing anything else in business. And then would be responsible for executing, meeting and reporting out.

There would be transparency in the company about what they were doing and how they were progressing along. The way I'm thinking about it, it's a completely different approach than just hiring a chief diversity officer and giving them an opportunity to talk to people and do camera shots and go out and make speeches. You got to do something a little more real here.

I think the first thing is getting capable people. Like anything, you've got to look around your organization. You want the brightest people who know how to get things done and you get that group of people together in a room to talk about solving this problem. You put a deadline on those people to come back with a plan, actionable plan, the resources you need to get this done, the milestones you're going to set for yourself, the goals you want to have for something like this in terms of how many people we're going to hire, how many people are we going to retain, how many people are we going to bring over into the senior ranks? And so what are we going to look like five years from now? And then give those people the freedom and the resources to go out and get it done.

Chitra: Is there a difference in terms of how you would tackle this problem, whether it's in a Fortune 500 company, an entrepreneurial company or even private equity—because diverse investment managers right now manage less than 1 percent of the $75 trillion available in investment capital, which includes private equity. So is there something nuanced or different about how you approach it on the corporate side versus the investor or private equity side?

Willie: I think on the investor side, it's a little nuanced because there's so many players involved and so many different levels of players, right? So when you think about the investors, there's foundations that have a different organizational structure and different culture and a different way of thinking. There is corporate investors who think differently. There is the state and local pension funds who all have a different way of thinking about things. And then you've got either large GPs who haven't quite created the opportunity for people of color to come and get the experience and be able to develop that skill set so that they can either do something by themself or be really marketable. And then you've got the deal sources, right? The people, the investment banks, the middle market investment banks who provide deals—and underlying all of that is two critical problems, right?

One is there's just pervasive, unconscious bias. It's not intentional. It's just that the industry has not been populated with a lot of people of color. And so you haven't had the benefit of being around people like that. And so you just don't have a perspective. All the stereotypes and things that just come to mind, you almost unconsciously can't help yourself.

So that's a big problem in my mind in the private equity industry. Some people may say that exists in the corporate world, but I believe because a corporation is one entity, you can control that better. In private equity because there's so many different types of investors with different agendas and different ways of thinking about it and different strategies, it's more complicated to get a grip on that, but solving that problem around unconscious bias is big.

And then second, you got to expose more people of color to this industry and business. I really believe most of us who are in this business, stumbled into our careers. I didn't know anything about private equity when I was an undergrad. I didn't learn anything about private equity until I became an investment banker. You've got to start going out on college campuses where there are lots of minority kids. So whether that be historically Black colleges or the Black clubs at some of these colleges and start exposing people at a much earlier age about asset management and private equity and why it's a good industry so that you can attract more people to the industry.

Chitra: But even when you think about senior levels within private equity, especially a lot of private equity firms recruit operating partners and all those operating partners are senior executives from industry. And a lot of those senior executives from industry may not necessarily be diverse because of the legacy problem on the corporate side. How do you also get more diversity at that level? Because those are senior members of your private equity firm.

Willie: You have to be intentional. So for us, we have been very successful at finding people of color to be operating partners, to be employees at ICV. As you know, 98 percent of ICV is diverse. We've been doing this for two decades. We've had no problem finding talent. We have a great group of people who've come through our associate program, all diverse people who’ve gone on to great business schools and become entrepreneurs. We're finding these people.

They can find these people too if they want to, but it takes intentional effort. It takes focus. It takes a desire to want to do it—like we want to do it. When we set our firm up, part of the thing we wanted to do was to make sure that more people of color got exposed to the private equity business and we were going to hire those people that others didn't want to hire.

We were going to give more people a shot because we thought it was very important for people who look like us to just get some exposure. Well, big private equity firms can do that. They just got to create the infrastructure to do it. They got to create the culture so that people feel comfortable and they got to have real intent. Like we're going to do this. Here's going to be our numbers. And we're going to join organizations. We're going to network. We're going to do all those things that we do. That's how we find it—networking in areas where there's just a lot of people of color hanging around and that's what you got to do if you want to find people like that.

Chitra: You talk about intentionality. You talk about unconscious bias. Some CEOs perpetuate the false narrative that it's hard to find talented people of color or that there aren't enough, especially at the senior executive or C-suite board level ranks. Why do you think this false narrative has been perpetuated for so long and by so many prominent CEOs and companies?

Most people aren't trying that hard in my opinion. They're making a half sort of effort at it. They might be going to the best business school colleges, but everybody of color didn't go to a top business school. They might be somewhere else. There is no organizational structure in place that's really dedicated to making this happen. There is no thinking around the culture, around how do we make this place more comfortable so that people of color will be happy to come here. Talent is out there. It's just you got to be intentional and want to do it.

Skydeck is produced by the External Relations department at Harvard Business School and edited by Craig McDonald. It is available at iTunes and wherever you get your favorite podcasts. For more information or to find archived episodes, visit alumni.hbs.edu/skydeck.

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