How They Did It: Google’s Innovative Approach to Supplier Diversity

This is an excerpt of the original article. It was written for the July-August 2017 edition of Supply Chain Management Review. The full article is available to current subscribers.

July-August 2017

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When employees of Google decide to purchase a product or service—from a desk to catering to electronic components—they can work with suppliers they already know or discover from a Google search. Or, “Googlers,” as Google employees call themselves, can also turn to a tool the company developed to find small businesses. Defined as U.S.-based companies with $15 million or less in annual revenue and 50 or fewer full time employees, these are the kinds of businesses that often have a specialized service or game-changing innovative product, but that might never come to the attention of a global technology leader because of their small size.

Yet, as a company that emphasizes constant innovation, Google has a vested interest in working with small, unique suppliers. To fulfill its mission to make the world's information useful and accessible for all requires diverse perspectives from suppliers of all size. And while Google is an engineering-centric business that develops many of its new products in house, like other major corporations, it outsources services and products that aren't best provided from within—such as food and transportation.

Diverse suppliers bring a number of tools to the table as value chain partners. Small businesses, for instance, are adaptable and less likely than big companies to cling to what has worked well in the past. What's more, when these suppliers use Google tools and interact with Google systems, the company receives feedback on user experiences and brand perceptions from communities that may be currently underrepresented online. That is critical data to Google, whose culture is focused on building products that will work best for everyone, tomorrow and the next day.

This is the strategy behind Google's Small Business Supplier Diversity program. Launched in November 2014, Google's first foray into supplier diversity seeks to:

1. connect more Google employees with diverse-owned small suppliers
2. connect those diverse businesses to opportunities within Google
3. help those suppliers grow on the web and improve their business skills, and finally
4. to foster innovation at the supply-chain level.

Google's take on supplier diversity is different from the typical program in that it does not require certification for women- or minority-owned businesses, to name two common categories. The application process was designed to be simple and comprehensive. By not restricting participation to certified small businesses, Google is open to working with a wider variety of diverse-owned businesses; it was built to be “universally accessible and useful,” just like Google's products. The application encourages all minority-owned, women-owned, LGBT-owned, disabled-owned and veteran-owned businesses, as long as they fit the other criteria.

The program is also adaptable and evolving, an approach in keeping with a company that lives by the motto “Launch and Iterate,” meaning there's always room to adjust and fine-tune an application or service after it has gone live.

This article, co-authored by two of the Google executives who worked on the project and a management professor and supplier diversity consultant from Dartmouth College's Tuck School of Management, is the story of how Google does supplier diversity the “Googley” way (the adjective that Googlers use to describe their company's collective creative qualities).

The world that was

There is one big reason that supplier diversity is different at Google: Procurement works differently, especially compared to other similarly-sized companies. For example, there is no formal procurement or purchasing function. Google's Procure to Pay (P2P) team owns and maintains procurement processes and systems, but procurement doesn't actually make buying decisions. Rather, all 65,000 Googlers are empowered to make their own purchasing decisions, based on their specific needs. This open approach, coupled with encouragement to do business with a broad spectrum of suppliers, helps ensure that innovations being developed outside of Google can be noticed, considered and become an element of Google's value proposition—as an integrator of technology as well as a provider of cutting-edge digital services.

But how does a Googler learn about and gain access to that broad spectrum of suppliers? That question was one of the catalysts for the Small Business Supplier Diversity program back in 2012, according to Adrianna Samaniego, senior global program manager of Google's Small Business Supplier Diversity program and one of the co-authors of this article. At the time, Google was working on a “business inclusion” initiative—in other words, efforts that help level the playing field for businesses and individuals without equitable access to technology—aimed at its customer base. “Initially, we were looking at the diversity of our customer base and the diversity of our workforce, but not the diversity of our supply chain,” Samaniego recalls. “We realized that if we want small and diverse businesses as customers, we should also want them as suppliers. We wanted to be open for business and have economic impact.”

At the time, Google was the equivalent of a “black box” to small and diverse suppliers—perceived as mysterious or even inaccessible. And similarly, small and diverse suppliers were not easily accessible for Googlers. With no formal supplier selection process, Googlers often learned of suppliers by word of mouth or from colleagues. To get listed on Google's internal corporate supplier registration site required a supplier to already have a contact inside the company. Finding that contact required patience and persistence. “One small business spent two and a half years asking around at our bus stop areas for the right person to talk to about their company before they found a contact,” Samaniego says. Obviously, not all companies would have the time or tenacity to find a contact within a corporation to pitch their services.

That year, Chris Genteel, Head of Business Inclusion at Google, attended the National Minority Supplier Development Council (NMSDC) conference to learn more. Based in Ann Arbor, Mich., Genteel was a long-time Googler who had previously worked with the U.S. Black Chambers. The takeaway from the NMSDC conference was that Google should commit to supplier diversity to drive measurable economic impact in communities that are under-represented online. But it was also clear that the company had a lot to learn if it was going to create a program that was not simply a cookie cutter of what was done at other organizations. It would have to fit with Google's fast-moving, fluid and highly data-driven culture.

Samaniego, along with Genteel and Adam Gardner, a site program manager at Google, each began to devote 20% of their individual work weeks to develop the program. This is a common practice at Google, which encourages employees to devote part of their days to passion projects; the policy has resulted in some of Google's best-known innovations, including Gmail.

From the start, Samaniego says, the supplier diversity program was jointly owned by both diversity and finance, with the team reporting to Ruth Porat, senior vice president and CFO of Google and Alphabet. Porat remains actively involved in supporting the program and learning from diverse suppliers. She recently held a brief round-table discussion with five suppliers from the program at Google's headquarters in Mountain View, asking them for candid feedback on the program that the team will implement to meet suppliers' needs.

Designing diversity

Genteel, Samaniego and Gardner spent 2013 designing the program. The objective, Genteel recalls, was “to build out a program that was meaningful and not just symbolic.” From the start, it was clear that an unorthodox, decentralized approach to procurement called for something other than a traditional supplier diversity program focused on quotas and certifications.

“Googliness is the core of our culture,” says Samaniego. “Many of our successes as a company have been the result of innovation teams that had the autonomy to go out and find suppliers rather than work from a list. That matches our culture, and not quotas and certification processes.”

Data is also core to Google's culture because it grounds creativity in practicality—as well as identifying measurable results. To build a business case for supplier diversity, Genteel, Samaniego, Gardner and their teammates collected as much data as they could about the current state of Google's supply base as well as the number of African-American, Latino and other minority-owned businesses in the United States. They then tied that to the impact Google could make in this area, based on the amount of money it spends each year.

The team spent the first five months of 2013 exploring what constituted a best-in-class supplier diversity program. They documented what Google's peers in high tech were doing (they learned that other than Intel and Dell, few had programs); how the certification processes work at organizations such as NMSDC and the Women's Business Enterprise National Council (WBENC); and finally, what was happening at the governmental level.

Google also reached out to the business community across the United States to hear what diverse-owned small businesses wanted and needed. There were several key learnings. One was that suppliers didn't want to spend hours completing applications, updating certifications or mining through complicated portals; they simply wanted a foot in the door. Second, many suppliers weren't sure whether investing in their Web presence as a marketing tool would yield a return, but they wanted to grow their digital skills because they want an equitable opportunity to participate in today's online economy. Many didn't know where to start. This feedback directly influenced the way the Google team designed the program and set its goals.

While key members of the team were based in different parts of the United States (Genteel in Ann Arbor, Mich., Gardner in Seattle and Samaniego in Mountain View, Calif.), they held several long workshop sessions, sketching out their ideas for the new program with erasable markers on giant white boards during video conferences.

By May 2013 they had a road map. And by that July they had defined the elements of the program:

• Instead of certified minority-owned businesses, the Google program would focus on small businesses using the EU definition of $15 million in revenue and 50 full time employees.
• Simplicity was top of mind: They needed a program and a technology tool, or portal, that was easy to use by suppliers and Googlers alike.
• Communication and partnerships were critical if Googlers and diverse suppliers were going to sign on. For example, suppliers complained that they often entered data into online portals and then never heard back. Google promised a response within two weeks after supplier information was received; whether any of the documentation, such as tax information, was missing or wrong; and what they could expect next.
• Provide clear value and benefits for participation beyond the potential for business, such as a discount on AdWords, faster payment for participating suppliers and, eventually, a training program to improve the business skills of small suppliers.
• Finally, Google created an advisory board it could leverage for guidance. Members received a one-page description of the program and its potential impact because the team recognized that they were creating something different from industry norms.

While Samaniego oversaw the marketing efforts, Adam Gardner focused on development of the technology behind the initiative. In addition, the finance operations team signed up to help connect more Google employees with small, diverse-owned suppliers and the diversity team set a goal to design program benefits that would help mobilize program participants on the web. This hybrid team, combined with the program's dual-pillared strategy, resulted in each group bringing different competencies to the program, as well as to participant suppliers. It represented the Googley approach of having a diversity of perspectives and skills at the table to solve a problem.

Early feedback from the first reviewers was positive. “People told us that they weren't surprised Google was doing this, that we'd built alignment with our culture and it made sense from an external standpoint,” says Samaniego.

Going live

Google's Small Business Diversity Program officially launched in November 2014 in Orlando, Fla. at NMSDC's annual conference. To prepare for the go-live, Google conducted a small pilot in Texas with the Greater Austin Hispanic Chamber of Commerce and the Dallas/Fort Worth Minority Supplier Development Council. Both organizations sent out an e-mail to invite a subset of its members to apply to the program and stress test the portal to make sure that it would stand up to traffic. Google also created a partner launch kit and social media presence to drive awareness. Those went to regional and national organizations such as NMSDC, WBENC and the National Gay & Lesbian Chamber of Commerce (NGLCC) to let their members know that Google would be in attendance.

While specific numbers were not made public, Samaniego described the event as “our coming out party to the industry.” Internally, it was considered a success, as measured by the number of applications to the Supplier Diversity program garnered at that event, as well as the number of press and social media hits covering the event.

Over the next year, the Google team continued to drive awareness and applications through partnerships and attendance at physical events. In 2015, for instance, the Supplier Diversity team attended an estimated 20 events with 12 partners across 20 states and cities, because suppliers wanted to see someone from Google at an event. They also hosted online Webinars to offer more access to information to a wider variety of suppliers who couldn't attend these events The supplier diversity team undertook similar marketing and education efforts internally with Googlers. The most important takeaway was that Google had to be physically present in communities to hear first-hand from community members and to build their trust.

“It was critical to meet diverse businesses where they do business,” Samaniego says. “That's where we heard feedback and that's where we demystified the process. A lot of small businesses think that because they're not a technology business, they don't have anything to offer to Google or they may not be ready to do business with Google.”

The big learning internally was a better understanding of how Googlers make their decisions and what type of information they needed to make it easy. “Initially, we thought that because we had a tool, they would use it,” Samaniego said. “But we had to do a learn-a-thon internally.”

Launch and iterate

One of the hallmarks of Googliness is to launch and iterate—that is, to get a program going and then reassess and tweak to make improvements. The same held true for the Supplier Diversity program.

When a 2015 review with Googlers found that many employees were only “Googling” on the public Web to find suppliers to meet their business needs, the Supplier Diversity team decided to build an internal tool to make this easier. The Google employees wanted a system that surfaced existing, approved Google suppliers who sold what they needed. The program team also wanted to make sure that small and diverse-owned suppliers were part of those search results to give them an equitable change to be considered. The project, headed by Gardner, was called Pivot.

What resulted was a combined supplier search and rating tool that accomplished several main goals:

• provided Google employees the ability to “rate” supplier interactions, and therefore surface better information on the best suppliers to other Google employees at scale, thus offering valuable data to help employees make decisions on whether to hire a certain supplier;
• offered an opportunity to provide Small Business Supplier Diversity Program participants a “foot in the door” by including them in search results, even though they hadn't yet worked with Google employees. Each supplier in the program was provided with a unique icon identifying it as a member in Small Business Supplier Diversity program; and
• connected Google employees with the suppliers who could provide products and services quicker, easier and more directly than just a random supplier found searching on the web with no clear reference of reputation or vetting to see if their culture would align with Google's culture.

The Pivot tool launched in July 2015, and the program team is tracking the way that Google employees are using it. Of key interest is the number of searches that include program participants, and whether Google employees reach out to program participants using the tool. Of secondary interest is whether the interaction leads to a purchase. Because the core program goal is to connect Google employees with participants, the supplier owns the process from the connection point to the sale.

Google's innovative supplier development program

Supplier diversity was the first important step in the development of the Small Business Supplier Diversity program. The second step was an innovative skills development program. To make that happen, Google began collaborating with the Tuck School of Business at Dartmouth College in 2015.

The Tuck School has deep expertise in the structure and management of supply chains, but the school also has unique experience in developing diverse suppliers as value-chain partners. Since 1980, Tuck has been providing custom learning experiences tailored to the needs of minority business owners. Its short programs—none of them longer than a week—offer a “boot camp” experience for small business owners. The design of these programs reflects the fact that the typical entrepreneur knows more about manufacturing a product or delivering a service than about running the business and taking a strategic role in a supply chain.

More important is the fact that poorly run businesses are not good supply chain partners. The Tuck School programs are heavily focused on making participants' own businesses better, which is why the case study for each program is the participant's own business. The participant learns what needs to be done, then applies the learning to improving his or her business. The “deliverable” of these programs is always a to-do list. It is with this development philosophy that the school approached the emerging challenge of achieving digital excellence. And the school collaborated with Google to achieve measurable results.

By the same token, Google is in a strong position to make a difference in the effectiveness of its suppliers. The business world has changed radically over the last 20 years. Since Google was founded in 1998, digital information has become central to how a business is controlled, and how customers and suppliers interact with the business. Google has a broad array of business tools available to make suppliers more effective and efficient by accessing and analyzing information.

The collaboration is led by Tuck Professor Alva Taylor, the faculty director of the school's Glassmeyer/McNamee Center for Digital Strategies, and draws on the distinctive competencies of both organizations. The Center keeps track of emerging digital capabilities and how these are applied to business challenges in a way that generates competitive advantage. That's exactly what small, diverse businesses need to do to become valued members of corporate supply chains.

Sessions at the three-day program range from constructing a digital strategy and marketing businesses online to managing a digital community. The topics include Website design, search engine optimization and successful digital business models and intensive sessions on analytics. The sessions are led by Googlers and Tuck faculty members, depending on who has superior expertise in a particular domain.

To date, the program has hosted four graduating classes since its launch in 2015, hosting more than 200 entrepreneurs as participants. Among the outcomes:

• all respondents surveyed found the program valuable to the growth and development of their business;
• all included implementing or creating a digital strategy in the “top 3 things” they will change when they return to the office;
• belief that a digital strategy to reach the business' fullest potential grew from 17% before the program to 88% after the program; and
• 125 of the participants in the supplier diversity program received scholarships from Google to date. Both Tuck and Google view the program as a success.

Supplier diversity today

The Google Small Business Supplier Diversity Program is now over two years old. Successful suppliers have benefitted not only from the business they have gained with Google, but the growth of their businesses as a result of the tools and training provided through the program.

Take two examples:

• Andre Leftwich, the CEO of Every Merchant, a digital marketing and strategy provider, has utilized Google Maps to create 360-degree virtual tools for local businesses after going through the Tuck program. “We have grown more than 100%,” he says. “I attribute this directly to the projects we've secured with Google and the tools that they have given us to help the companies we serve.”
• Matthew Moses, the owner of Shalimar Media Group, a provider of corporate apparel, began working with Google several years ago to design a shirt for Black History Month and now does a few projects for the tech giant each month. Through his participation in the supplier diversity program, Moses took advantage of the Digital Excellence Program offered by Google and Tuck. “My main takeaway from the three-day course was that even as a small business, I can compete with the biggest companies if I have a solid digital strategy,” Moses says.

Large corporations have sophisticated supply chains that are digitally enabled. Small suppliers need to be equally sophisticated if they are going to successfully interface with corporate value chains. This innovative program shows that small, diverse suppliers can be taught to catch up and present themselves as competent participants in today's and tomorrow's major value chains. Still, Google continues to look for ways to launch and iterate to continue to grow the program.

“We now want to invest more in education; we're digging into our data to understand where we are compared to our metrics of success; and we're drilling down by community into the community of diverse suppliers to uncover the areas where we can improve,” Samaniego says.

To that end, the team launched the program in Ireland in March 2017, and plans to launch in five other locations globally this year. “Google and our parent company Alphabet are now expanding into almost every industry you can think of,” Samaniego adds, referring to the company's extension into hardware, self-driving cars, health, shopping and others. “In order to continue to be innovative, our supply chain needs to be inclusive.

About the authors:

Adrianna Samaniego is senior global program manager of Google Small Business Supplier Diversity. Adam Gardner is the former program manager of Small Business Supplier Diversity and now the Seattle site lead. Chris Genteel is head of business inclusion at Google. They can be reached at [email protected]. Leonard Greenhalgh, Ph.D. is a professor of management and director of the Programs for Minority- and Women-owned Businesses and Native American Business Programs at the Tuck School of Business at Dartmouth University. He can be reached at [email protected].

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