Every year, big companies spend billions of euros in procurement, but discriminate against local entrepreneurs who lack the right networks or the right reputation. Majid El Jarroudi is bridging this gap by setting all entrepreneurs on an equal footing through a unique platform that connects procurement officers’ needs with the potential of entrepreneurs in disadvantaged areas.
The New Idea
Majid is radically transforming the purchase practices of companies by revealing the untapped potential of doing business with underserved entrepreneurs in marginalized neighborhoods. By targeting France’s young generation of procurement officers and connecting them to potential suppliers in these localities, he manages to break down stereotypes, create more competitive and fair business practices, and foster a community of like-minded, diversity-conscious decision-makers. To accelerate this shift, Majid has designed his organization, Agency for Diversity in Entrepreneurship—Adive, as a marketplace where large companies can submit their calls for tenders to entrepreneurs in marginalized neighborhoods and entrepreneurs can promote their services.
Through local networks, Majid identifies and vets a large number of entrepreneurs working in underserved areas and who have the potential to meet the needs of big companies. In addition to opening up new markets to them, he helps the entrepreneurs build capacity and trains them to the specificities of the tendering processes. Among the 200 entrepreneurs on Adive’s platform, one-third has successfully won bids. Furthermore, in a “satisfaction evaluation” 83 percent of entrepreneurs reported being “very satisfied” with Adive’s service and commented that their businesses would no longer exist without Adive. By acting as a bridge between big business networks and an emerging generation of talented, but marginalized, entrepreneurs, Majid’s marketplace strengthens vulnerable communities by building sustainable local companies, creating employment, opening up economic opportunities, and developing positive role models for youth.
Within a year and a half, Adive has had a tremendous impact on the business practices of 35 leading companies, who have purchased over 500,000 Euros worth of goods and services from companies they would have previously overlooked and undervalued. More recently, European Aeronautic Defence and Space Company N.V. (EADS) decided to dedicate 50M EUR (US$70.644M) in purchase from the entrepreneurs supported by Adive. Starting with the 40 largest firms in France, Majid is fostering a world where all companies have the intuition and reflex to choose their suppliers among entrepreneurs from marginalized and underprivileged backgrounds, while still maintaining competitiveness.
The 2005 riots in France shed dramatic light on social, cultural, and economic discrimination toward low-income, high diversity neighborhoods and their inhabitants. Since then, and thanks to the work of leading social entrepreneurs, companies have made some progress in recruiting from these neighborhoods and cultural perceptions of underserved individuals have somewhat evolved. However, companies still fail to see the economic potential of local businesses and discrimination still prevails in procurement processes. The cultural stereotypes of procurement officers are reinforced by the fact that most of them have never stepped foot in an underprivileged neighborhood or have met entrepreneurs from diverse backgrounds. Instead, the attitude remains that “you do business with people you know.”
Besides, the priority of procurement officers is to kill costs and the easiest way for them to do this is to give priority to their traditional networks of suppliers. As a result, only 5 percent of suppliers to big French companies are located in underprivileged areas, even though the business creation ratio in at-risk neighborhoods is 20 percent above the French average. It is often economically nonsensical: A company in Paris can have a paper supplier in Marseille and a printer in Lille, while they could access more price-competitive, high-quality services in a disadvantaged neighborhood only 5 kilometers away. There is a truly missed opportunity to tap into the goods and services of an emerging sector of innovative, low-cost and effective companies.
Entrepreneurs from marginalized neighborhoods have many obstacles blocking their entry into mainstream markets. For one, they tend to have lower levels of studies or degrees from public universities rather than elite colleges. They also tend to remain isolated from traditional business networks and do not know how to navigate the system to access procurement opportunities. Moreover, they remain invisible due to the lack of precise economic data from underprivileged areas. Confronted by these obstacles, these entrepreneurs struggle to keep their businesses afloat. This is evident in the fact that, when isolated and ignored, entrepreneurial endeavors in underprivileged areas create a third fewer jobs and have a third fewer chances of survival after three years than the national average.
Adding to these obstacles is a policy framework that limits and even hinders the success of underserved entrepreneurs. European Union legislation prevents companies from targeting their calls for tenders to specific categories of suppliers. Policies cannot change without available information on underserved entrepreneurs and their economic and social value to communities. In France, however, since large companies are not authorized to request ethnic criteria and other personal background criteria from their suppliers, it is impossible to quantify the economic benefits arising from underserved entrepreneurs. Furthermore, because diversity is only valued in terms of corporate social responsibility and not in terms of economic competitiveness, there is no measurement of these entrepreneurs double or triple bottom-line impact on communities.
Majid has developed a threefold approach to change the behaviors and mentalities of decision-makers in big companies toward underserved business entrepreneurs. First, through in-person meetings, informational breakfasts, workshops, and field-visits, Majid assists companies assess their current procurement processes and helps them to become aware of opportunities to find suppliers in discriminated areas. He thus breaks the first barrier of prejudice by connecting procurement officers interested in diversity opportunities into a community of peers, which fosters emulation and shares best practice.
Next, Majid encourages companies to create a position of interface between human resources, diversity and procurement departments, which is solely dedicated to the issue of supplier diversity. For example, the pharmaceutical laboratory of Bristol-Myers Squibbs (BMS) has designated a manager to ensure all the company’s calls for tenders target underserved entrepreneurs and that the company pays special attention to the bids they receive from disadvantaged neighborhoods. In the long-term, Majid is fostering the creation of this diversity-oriented position in each company of the CAC 40 (i.e. the benchmark French Stock Market Index which includes the country’s 40 largest corporations) so that a focus on diversity is part of the daily business of these firms.Finally, Majid works upstream to shift the culture of future decision-makers by giving specific trainings in leading business schools, like INSEAD. His goal is to integrate the question of “diversity” into all existing responsible procurement training programs.
Convinced that his integration efforts will only work if they make sense economically as well as socially, Majid has designed Adive as a marketplace to facilitate commercial relations between large companies and underserved entrepreneurs. Relying on local partners to identify entrepreneurs, his platform uses a set of precise criteria to methodically qualify an entrepreneur’s activities, assess his/her capacity to supply to big companies and match the entrepreneur with the most appropriate calls for tenders. Adive also provides entrepreneurs with training, thanks to a partnership with HEC Business School, and ongoing feedback throughout the tendering process. These capacity-building efforts ensure the entrepreneurs are recognized for their quality and competitiveness, so that they may enter and remain in big business networks.
Majid’s marketplace works both ways. It helps large companies connect with a diverse range of entrepreneurs, but also allows emerging entrepreneurs with highly innovative goods and services to enter Adive’s database and use its platform to promote their offers to businesses. This allows them to kick-start their business and to be at the cutting edge of technology and innovation. It also demonstrates the great innovation potential of companies in emerging neighborhoods.
A year and a half into the creation of Adive, Majid has demonstrated on a small-scale the potential of his marketplace model and is virally engaging increasing numbers of large companies and potential suppliers in the Paris area. In line with his strategy to include all discriminated groups into good procurement practices, he is expanding his networks to Marseilles, Lyon, and the North of France by connecting with the local branches of his current partners.
Majid’s unique template has the potential to bring many other discriminated groups into the mainstream economy. He is preparing for the inclusion of entrepreneurs in other regions in France as well as entrepreneurs who suffer from other forms of discrimination, such as women and the handicapped. Additionally, Majid is working on much needed studies to evaluate precisely the economic weight and impact of discriminated entrepreneurs. Since national data on the diverse background of suppliers does not exist, Majid is developing criteria to measure the impact of these entrepreneurs. He is therefore creating the necessary conditions to make up for the lack of information on and visibility around these entrepreneurs. Moreover, Majid also identifies high potential entrepreneurs, whose products or services are so innovative that they do not enter into traditional supply chains. By connecting them with large companies, he accelerates their entry into the market and provides a cutting edge to companies who play by the rules of diversity.
Majid was raised with the understanding that you have to fight for your dreams to come true. His Moroccan father succeeded as a boxer in Algeria and was the first professional boxer in France. But he had different ambitions for his son and did not allow 14-year-old Majid to become a professional soccer player when a famous Parisian team approached him. Instead, Majid pursued high-level business and journalism studies. As a student, an aspiring entrepreneur, and always eager to discover new initiatives, Majid traveled alone across Canada and the U.S. and was struck by the entrepreneurial spirit and success stories of underserved entrepreneurs in America. He became intrigued with the American Small Business Act and wondered how to foster such an entrepreneurial energy in France.
Returning to France, Majid started his first company at the age of 22 and continued to launch new initiatives and businesses to support entrepreneurs in their success, including a strategy consultancy firm, a real estate agency (both dedicated to entrepreneurs) and a cultural café. Working alongside many entrepreneurs struggling due to their social and cultural origins, Majid took an active part in many initiatives to promote diversity and entrepreneurship, such as working with Ashoka Fellow Abdellah Aboulharjan in starting Jeunes Entrepreneurs de France (JEF), to help young entrepreneurs successfully launch their companies. As honorary roles, he still takes part in Jeunes Entrepreneurs de l’Union Européenne, a European network based on the same model as JEF, and is Vice-President of Humanity in Action, an international non-profit working on the protection of the rights of minorities.
Seeing the limits of all other approaches and with the Small Business Act in mind, Majid set up Adive at the end of 2008 and has since then gained increasing recognition for his work. He is now considered an expert in the fields of diversity and entrepreneurship; spreading his vision and expertise through lectures in some of France’s leading business schools (HEC, and INSEAD), at national media interventions, and conferences. In May 2010 Majid represented France at Barack Obama’s 2010 Entrepreneurship Summit in Washington, D.C.