The Wrong Lesson To Learn In The Wake Of DEI Effort Missteps

When can a toss-off line in a movie description stop somebody who cares about market-rate housing and real estate in their tracks?

Answer: When it reads like this.

America’s systemic failures—in health care, housing, the environment, and so on—are not only interconnected but have also created a troubling reality in which people cannot imagine a future free from disaster."

Of course, you may reply, consider the source. Editorial filters and biases may either sharpen truths or distort them. Still, it is jarring to see in black and white a conclusion that housing ranks – in some minds, anyway – as one of "America's systemic failures."

We'd rather consider the realm of real estate and construction and their business ecosystems' capacity to one-day meet America's housing needs – despite known and yet unappreciated vicious circles and tripping points – as challenged. As an ongoing work in progress, perhaps. As one whose solutions, as elusive and frustrating as they've been and continue to be, remain nonetheless worth pursuing exactly because they're not systemically broken.

Systemic failure?

We doubt that.

Still, it would be delusional to assert that money, political will, land, people, materials, and know-how all work in sync to address housing's affordability, attainability, and access challenges. They don't. They haven't. And they won't – unless things change – everywhere, always, and all at once – on the capital, political will, and private sector innovation front.

Still, we would not describe "housing" as one of America's systemic failures, even as far as it is now from meeting many of its people's needs.

But taking a look at just one area – private sector innovation – within that gamut of vicious circles and tripping points, there's a roiling brew of business cultural issues that run right to the root of homebuilding and residential development's capacity for resiliency and sustainable success.

These issues tie to an acronym – Diversity, Equity, and Inclusion – that's a topic of hot dispute, especially of late, as rancor and polarization widen their sway in business as well as social and political discourse.

A conversation we had this week with a long-time senior advisor to homebuilding organizations who described a sit-down he had – 10 weeks ago – with three successful, strategic-level female executives. The context of the conversation was, "why are there so few names that emerge when homebuilding and real estate firms specifically seek women for leadership roles?"

Our contact asked his three female discussion participants this question:

Is the old-boy network still as much a phenomenon as ever in management and leadership among the business community's organizations?"

Without missing a beat, his three companions in the conversation replied all at once, with exclamation points.

Absolutely!"

Now we know there has been progress. We know that corporations large and small have committed and invested in making their workplaces – from the ranks of front-liners to the corner office – a place of dignity, respect, and opportunity to grow and succeed. Some of this progress may owe itself to the push for DEI progress across the American economic and cultural landscape.

Some of it may originate elsewhere as well, such as an individual owner's practical approach to business improvement.

Right now, however, some of that already-accomplished progress – not to mention continued progress toward opening even more expansive opportunities across gender, color, race, creed, etc. within a business and industry sector so hungry and thirsty for talent and effort in all of their forms and incarnations – feels as if it's at risk.

A reflexive rejection of DEI – as "reverse racism," or political indoctrination, or woke liberalism, etc. – flies against a simple precept that long-time homebuilding strategist and Vistage group chair George Casey reminds us of in his most recent weekly missive:

Peter Drucker once remarked that 'the purpose of a business is to create and keep a customer'. Every executive needs to remember that all his or her customers are outside the company, which in turn ought to encourage us to think about ‘managing from the outside in.'”

For homebuilding and residential real estate business leaders, the opportunity – and urgency – will be to focus on DEI as a core practice in pursuit of Drucker's simply-put "purpose of a business."

Here's a framework of opportunity areas – ones that will require rigor and stick-to-itiveness to see through to full operationalization – to consider in an environment that's picked up in rancor in a more polarized, knee-jerk style workplace setting [Editor's note: ChatGPT assisted with setting this framework's nine opportunity areas from a series of specific questions].

1. Reframe DEI as a Business Imperative: Begin by positioning DEI not as a political or ideological issue but as a strategic business practice. Emphasize that DEI initiatives are about tapping into diverse talent pools, understanding a broader range of customer needs, and fostering innovation through varied perspectives. This approach aligns DEI with the fundamental business goals of profitability and market competitiveness.
2. Customer Diversity and Market Expansion: The customer base in real estate and construction is diverse and evolving. A team that mirrors this diversity is better equipped to understand and meet these varied needs, opening up new market segments and enhancing customer satisfaction. Diverse teams can offer insights into different cultural preferences in home design, community development, and service expectations, leading to products and services that appeal to a wider audience.
3. Innovation and Problem Solving: Diversity in teams promotes different ways of thinking, leading to more innovative solutions. In industries like construction and real estate, where problem-solving and innovation are key, diverse perspectives can lead to more efficient processes, creative designs, and effective marketing strategies.
4. Talent Acquisition and Retention: The war for talent is intense in many industries, including construction and real estate. Companies committed to DEI are more attractive to a broader range of job seekers, including top talent who value inclusivity. Moreover, inclusive workplaces tend to have higher employee satisfaction and retention rates, reducing costs associated with turnover.
5. Challenging the Meritocracy Argument: Address the argument that prioritizing DEI conflicts with hiring the most qualified candidates: Highlight that traditional measures of qualification often overlook systemic biases. DEI initiatives aim to broaden the understanding of what makes a candidate qualified, considering diverse experiences and backgrounds that bring value to the company.
6. Financial Performance: Cite research and case studies showing that companies with diverse leadership and staff often outperform their less diverse counterparts financially. Diversity can lead to better decision-making, greater innovation, and improved risk management, all of which contribute to a healthier bottom line.
7. Risk Mitigation: Companies that fail to embrace DEI risk falling out of touch with societal trends and market demands. This can lead to a weakened brand reputation and reduced market share. Embracing DEI is also about mitigating these risks.
8. Leadership and Corporate Culture: Address the dominance of men, particularly white males, in leadership by discussing how inclusive leadership can reshape corporate culture for the better. This involves training and development programs to prepare a diverse range of employees for leadership roles, ensuring that the future leadership of the company is more reflective of the market it serves.
9. Transparency and Accountability: Implement transparent metrics and accountability for DEI goals. This shows that DEI is being approached as a serious business strategy and not just a superficial or political gesture.

By grounding the argument for DEI in practical business outcomes — such as market expansion, innovation, talent management, financial performance, and risk mitigation — the conversation shifts from one of political ideology to one of strategic business management. This approach can help address objections and demonstrate the value of DEI initiatives in driving business success in the construction and real estate sectors.

Recently, New York Times columnist David Brooks wrote beautifully about an entirely different domain, but that makes so much sense within this very conversation: that DEI is an approach to Peter Drucker-like sustainable business success, not an ideological red-herring. He writes [gift link]:

It seems banal, but division of labor was part of a constellation of ideas that liberated our civilization from the savage grip of zero-sum thinking. For millenniums before that, economic growth had been basically stagnant. Many people simply assumed that the supply of wealth was finite. If I’m going to get more of it, it will be the result of conquering you and stealing what you have. In a zero-sum mind-set, the basic logic of life is dog-eat-dog, conquer or be conquered. Property is theft. Predators win.

Division of labor, on the other hand, and the other principles that underlie modern capitalism, encouraged a positive-sum mind-set. According to this way of thinking, the good of others multiplies my own good. Steve Jobs got to enjoy a fortune, but I get to enjoy the Mac I’m now typing on and tens of thousands get to enjoy the jobs he helped create.

In this kind of society, life is not about conquest and domination but regulated competition and voluntary exchange. Not about antagonism but interdependence. In this kind of marketplace, Walter Lippmann wrote in the late 1930s, “the vista was opened at the end of which men could see the possibility of the Good Society on this earth.”

So, tell me. Is it just me, or should I have not been caught so shockingly off-guard by a characterization of housing as a shining example of "America's systemic failures?"