Break free of the MBE mind-set
In this insightful telephonic and e-interview Chetan Shah, VP of Northwest Software Inc. (NSI), a Beaverton, Oregon-based MBE (minority-owned business enterprise), shares his perspective on surviving the shifting sands of the world of business, dancing with the elephants and why an MBE must get out of the MBE-mindset to succeed. NSI delivers a recruiting automation product; their patent-pending technology considered by his corporate clientele as the model of the future in the $62 billion staffing industry.

If you were to tell our readers in a couple of sentences about what your company does, what would that be? What is your elevator pitch?
NSI has developed patent-pending technology “EZRecruit” to streamline human capital acquisition. EZRecruit, coupled with our 17-year track record, helps us add unique value (response time, quality, and cost) to our customer’s contractor and full-time staffing needs.

Can you tell our readers a little more about the company? Your strategy?
Our focus has been on continual innovation (both technological and process) in order to be the best human capital acquisition company. Over the last 17 years we have researched and experienced best staffing practices, which we implemented in EZRecruit – an enterprise recruiting solution that took us over 50 people-years and in excess of $8,000,000 to perfect. Our customers ask us about how we serve our staffing needs so well, and become considering EZRecruit product for their possible in house use.

Besides innovation, we have relied on partnerships with complementary values to provide a full solution to the customer. In an environment where corporations are shrinking their supply base, they are looking for suppliers to do more and more. We have partnered with several Vendor Management firms in order to manage a group of suppliers for staffing as well as project solutions. The benefit of such partnerships is that it brings together best-in-field technologies powered by deep experience.

For those progressive corporations who adopt diversity as a way of doing business, we have developed a unique business model to help them increase their diversity spend with a large base of suppliers, while reducing their supply base. More importantly we have created a level playing field for diverse suppliers, and corporations and our diverse supplier partners love this. They are tired of working with majority owned corporations who pay “lip service” to diversity programs and benefit from the low hanging fruits, while sending opportunities they cannot service to diversity suppliers. We have had tremendous success with this model of sharing. We have been able to generate cost-savings and productivity for our clients through this approach. As a matter of fact, our model can be extended beyond human-capital acquisition to acquisition of any goods and services in a milestone-based project.

Finally during her acceptance speech when she was honored as SBA’s Small Business Person of the year 2002, Sonal Shah said that above all we emphasize ethics and flexibility as a way of doing business.

How does a small business make that breakthrough they all strive for?
It is all about execution in a number of fronts including your business strategy and connections (which come about by networking). Once you have a compelling value proposition, you need someone to listen, understand and articulate it. You need to find that internal champion in the corporate maze. We at NSI focus regionally – a lot of personal contacts in the west coast region helped us. We eventually expanded to 22 states through a series of partnerships. But then relationships take you only so far. You have to very soon back it up by showing a compelling value proposition. Also, don’t underestimate the power of diversity managers – they could be great influencers within the corporation.

That brings up a common dilemma of small businesses – dancing with the elephant. How did you master the art of dancing with the elephants? What is your advice to other aspiring businesses about generating and nurturing large corporate customers?
At the outset, a diverse-owned business must realize that their diversity status is not necessarily going to get them business. All things being equal, diversity may help – but don’t hang your hat on this. The key for success for any small or diverse-owned business is to break free from the diversity mind-set. Get out of the MBE mind-set and think like a big business.

Understand what your customer wants. Understand the pressure points in their supply chain. Be flexible. If they want to reduce suppliers, don’t tell them to make you a supplier. Every major corporation has a conduit. Do the research to find that conduit. Try a customer reference or seek an introduction so that a call to a prospect becomes a warm call and not a cold call. Something to keep in mind is the fact that people are happy with the status quo. I spoke to one major corporation recently and they said that everything is fine and to contact them in about 18 months. When something is not broken, why change? However, in any status quo there are opportunities for improvement. Find the pressure points, find that conduit. I tell my sales team “do your research and don’t ask look for the right angle to address these pressure points”.

What then are your suggestions to other MBE’s for survival and success?
Ask yourself why you are different and better than your competition. More importantly what can you offer the customer that is valued and different? We have typically started on a small project with a customer, demonstrated success, worked the relationship, and expanded the relationship over time and with appropriate value propositions. Since 1998-99, we have seen a major trend towards supplier consolidation. Progressive corporations genuinely want to do business with diverse-owned businesses. Unfortunately some prime vendors to these corporations do not create a level playing field for such diversity organizations. How can they, if their internal incentive is to increase their profits? Our approach is to share the opportunity on a level playing field with all, and let the best shine. Corporations love this approach because it extends the opportunity to diverse companies, and they get to work with the best provider. Be flexible. Realign yourself with prime suppliers. But make sure that the prime suppliers you align with has an incentive to help you grow. It should be more important whether a diversity firm gets most of the work, as opposed to whether the diversity firm owns the actual contract with the customer.

Something else that really matters in the long haul is the value system of the business. As a small business there is a tremendous opportunity to set the right values right at the top – Don’t compromise on integrity, no short-term benefits, don’t compromise on ethics, stay flexible. People like to do business with people they trust.

How big is NSI today? Where do you see it going?
We operate in 22 states and have a subsidiary in India. Worldwide we have about 150 people working for us. We have stayed profitable every single year. I see our business continue to create level playing fields for diverse-owned businesses, and in the process we will be helping ourselves too. Our industry is a $62 billion industry…those are year 2003 figures from the American Staffing Association. Through the right partnerships and the right combination of products we see opportunities that have no limits for NSI and for our diverse partners.

Tell our readers about your career, education and life outside business.
Prior to NSI, I have held senior positions in marketing at Intel Corporation. I have a BS degree with honors in Mechanical Engineering from the Indian Institute of Technology, a MS with honors in Systems Engineering from SUNY Buffalo, and an Oregon Executive MBA from the University of Oregon.

Outside of work, my children keep me very busy – we have been tremendously busy helping them raise money for the tsunami victims in Asia through their school activities. At NSI itself we have helped raise donations and matched it dollar for dollar. I am also actively involved with the Northwest Minority Business Council.

Chetan, it was a pleasure talking to you. Have a safe drive and a good day. It was good to talk to you. You have a great day too.

posted by Supplier Diversity Times on Wednesday, January 19, 2005 at 1:46 PM