Anchor-Based Business Development
Season 3, Episode 7
Episode 7 of the CitySCOPE podcast features a conversation with Kate Cooney and Boris Sigal, Co-Executive Director of the Community Purchasing Alliance (CPA). Boris graduated from the Yale School of Management in 2014. Post-graduation, Boris worked for a number of years in New Haven, first in a special one-year position created between the New Haven City Economic Development Administration and the Yale University Office of New Haven and State Affairs and later as Director of Business Development at New Haven Works, where he focused on building closer relationships with the regional business community and aligning local hiring opportunities with large employers like Yale University and Yale-New Haven Health. Topics include: insights from analysis of Yale University’s procurement spending and the impact of operational decisions on the regional economy, reflections on a year-long initiative to move some of Yale University’s spending on procurement toward regional vendors, the landmark Yale University New Haven Hiring Initiative, and the impact on local business development that can result from banding smaller anchors (churches and schools) into purchasing cooperatives. Join us!
1. Community Purchasing Cooperative- https://www.cpa.coop/
2. Democracy Collaborative-https://democracycollaborative.org/
3. New Haven Works-http://newhavenworkspipeline.org/
4. New Haven Hiring Initiative-https://your.yale.edu/work-yale/careers/new-haven-hiring-initiative
Kate Cooney (00:00):
This is CitySCOPE.
Eun Sun Cho (00:01):
A podcast on cities and inclusive economic development from the Yale School of Management.
Kate Cooney (00:07):
Are we ready?
Manuel Morales (00:08):
Kate Cooney (00:24):
Welcome to episode 7 of the CitySCOPE podcast. I’m Kate Cooney, faculty at the Yale School of Management and founder of the Inclusive Economic Development Lab. Today, we pick up on the question of how to use supplier procurement as a lever for inclusive economic development with a focus on anchors and anchor-based economic development. Joining us today on the pod, we have former New Havener and graduate of the School of Management MBA program, Boris Sigal. As you’ll hear, Boris has thought deeply about how to build local economic development strategies using supply chain purchasing. So let’s get into it.
Boris Sigal (01:03):
My name is Boris Sigal. I am a graduate of the School of Management, the class of 2014. I guess that’s coming up on seven years, which is hard to believe. I am currently the Chief Finance Officer for the Community Purchasing Alliance Co-operative, DC-based member co-op.
Kate Cooney (01:21):
Welcome, Boris. It’s great to have you here with us today.
Boris Sigal (01:25):
Yeah. Great to be with you, Kate.
Kate Cooney (01:27):
So Boris, you’ve done a lot of work in this area of economic development that sometimes gets referred to as community wealth building. What does that term mean to you more broadly and how did you get involved in this work to begin with?
Boris Sigal (01:42):
I think economic development has a lot of different ways of answering different questions. There’s the question of, you know, are we more broadly growing? Are we generating more output from one year to another? There’s a pretty well-established kind of macroeconomic policy framework to think about how do you increase a few basis points on your GDP. And that certainly has a connection to wellbeing and we’ve seen a generation or two now of incredible prosperity growth for maybe 10-15 percent of the population tied to those two sets of questions. Community economic development or wealth building really is driving towards a more relevant set of questions, which isn’t just are we growing, but more of the qualitative side of it. How are we going growing and who is it benefiting? Is there a connection between a more broad based prosperity and thinking, introducing the approaches that secure better jobs, more accessible jobs? And I think there’s this very real question of who has access to those opportunities and or broader conversation about communities that have been locked out of good jobs. So even as the jobs that were accessible to a lot of people, you know, through union restrictions or other mechanisms were just unavailable. So community economic development or wealth building is driving much more towards this question of it’s not just economic growth, but what kind of economic growth and how is it in line with the kind of society or community we say we want to be? And I think on a more personal level, for me, I’m a first generation immigrant, came over here in the 90s. And while my upbringing in the US has been of mostly upward mobility coming and living in Section 8 housing and welfare and food stamps, and being able to for a decade or two… my family along through a path of mobility or narrative that we pride ourselves on. Growing up in the Midwest, my neighbors, I’m in Lansing right now. You know, the residents across the town here are experiencing a very different reality of the same community. And as a first generation refugee from the Soviet Union, I’m getting closer and closer to the stories of my family, of my grandfathers, my parents who firsthand felt what collectively we’re capable of in terms of oppression, of violence, of exclusion, of discrimination. And I think the questions that community economic development and wealth building are trying to answer for me feel much more relevant, relevant for the idea of the U.S. in the kind of setting you want to have, but also for my own personal story, the kind of life that my family has experienced for generations and generations. And I’m really the first to really kind of escape that.
Kate Cooney (04:17):
When I first met you, you were pursuing your MBA at the Yale School of Management. Tell us a little bit about what you had been doing leading to that decision to get your MBA.
Boris Sigal (04:28):
I was in Washington, D.C., before 2009. I worked in a couple of states helping the Obama campaign. I had been an organizer in Michigan and had joined up just after the election. There were a lot of a lot of people moving to D.C. and really deeply influenced by the realm of possibility that organizing could have on some of the most pressing questions, and particularly off of the coming in the middle of the Great Recession and seeing incredibly asymmetric effects and communities on the tail end of generations of decisions and structural challenges. There is a whole set of questions about what can organizing do to solve some of these challenges. And I had joined up with a few fellow organizers who were coming off pretty successful approach using organizing to get a political outcome. What did it look like when you try to organize around money and economics, and particularly when you’re knocking on somebody’s door and asking for a vote? There’s a lot of connection to local issues and local identity. Is there an ability to have similar conversations with individuals and institutions about local economics, the connection between the way we act, not just at the ballot box, but the way we act as economic agents and the connection between what’s happening in our communities, the kinds of businesses that are setting up or not setting up, kinds of employment practices we’re seeing or not seeing.
Kate Cooney (05:55):
Boris joined with a group of organizers who are applying some of the organizing principles used during the Obama campaign in a Washington, DC based project known as Groundswell to identify shared needs and issues among organizations in the D.C. area. They started with larger churches and schools. A pressing need was identified right away.
Boris Sigal (06:16):
We heard stories of a pretty prominent and large church in D.C. who was spending more on their electricity bill than they were on their clergy staff, and they had a part time organist trying to organize a range of options for which they had. And I think that incidental space, we were there to talk about one thing, but very clearly heard a very different need came a very nascent, small about a dozen institutions group that was talking and sharing their operational problems and then asking questions of what is it look like to purchase together. These are the first seeds of a co-op that manifested years down the line. But I think it really reoriented me around this idea of how does money flow through a local and regional economy and how does that create the circumstances around us? And how does that affect people in institutions?
Kate Cooney (07:10):
So before you had come into Yale, you had been doing this work with community organizing with churches and other kinds of entities about how they could band together and purchase some of the key things they were purchasing individually as a group at a lower price. Thinking about money flowing through regional economies. And when you got to Yale, you were immediately interested in the greater New Haven city context in which Yale is situated.
Boris Sigal (07:37):
Nestled between New York and Boston, Yale I think feels the need to really use New Haven, right, as one of the reasons or to overlook or to try to sell prospective students. For me, you know, I think it was being in New Haven as a big draw. I think the kind of themes that we were working on, I was thinking of and I think really like the basic set up of so many cities across the US in New Haven and the relationship between Yale and New Haven really felt like, you know, in certain ways, a microcosm of what was happening across the entire country.
Kate Cooney (08:09):
Yeah, I remember early on talking with you about the role of large entities like Yale in their regional economy. And you know, this has come to be thought about as this anchor-based approach to economic development. For people who don’t know this term of art. What is an anchor based approach to economic development? And when you were at Yale in 2014, what was the conversation around anchors and economic development?
Boris Sigal (08:39):
I think back in 2014, anytime I brought the term up, “anchor,” people were looking for ships. So now I think if there’s been any progress, you know, I no longer have to explain that term, that much. Anchor-based economic development, maybe more specifically, anchor-based community economic development, really, I think is the marriage of two very different things. One is an anchor institution, one that is literally rooted inside of a community because you are in one place and cannot physically leave, your understanding of how you operate, even in your own self-interest is very different from an institution that can pick up and move as economic trends change, as realities change, as local conditions change. Very often this term applies to hospitals, to universities, to other community institutions, schools, religious organizations, sometimes government entities, so they have their own privacy considerations. And then, the community wealth building side of it is the connection between operational business decisions by these anchors, and how does it affect not just economic development outcomes? Are we outputting a little bit more this year than last year? But how is it connected to the quantitative and qualitative well-being of the communities around that institution? When I first came to Yale, I think this idea, I think, was starting to percolate and enter conversations. I think the most tangible examples may be in 2005, 2007, University of Pennsylvania, as they expand into West Philly, had a pretty big campaign that I think really tried to weave the narrative, if not the practice of community economic development anchors. Obviously, the Cleveland cooperatives and the connection to the University Hospital and Cleveland Clinic, and I think there were a couple of individual examples in the narrative. You know, largely thanks to the work of Democracy Collaborative at the University of Maryland, the narrative was being woven about what the relevant kind of approach to help an urban area and what is the connection between the actual economies that are emerging there. The knowledge and healthcare economies that are emerging, and I think a real hope and desire to create shared interests between the two that out of identifying the self-interest of having students and faculty and patients and doctors, if not commuting through, residing or being in a place that is enjoying stability, safety, prosperity, and vitality. At these institutions to think about the connection between the operational decisions and the kinds of outcomes in the health of the communities around them. At Yale, I think there was at best some class that I sometimes talk through. I put up a wheel of all the different ways that Yale acts as an anchor, as a purchaser, as a developer, as hirer, as a as an employer. There’s maybe eight different functions. Yale had, you know, some tactical strategies in each one of those, but there was no unified understanding in this kind of framework, which I think it wasn’t that far out of line from most major institutions. You kind of had initiatives that came out of their own set of circumstances, but I think nothing was driven by this orientation of “we are an anchor institution” and the way we make business decisions has a material impact on Dixwell, on Newhallville, on the Hill, on Fairhaven, on the communities around us. When I arrived, a lot of really interesting, good things happening. But I think far from a recognition, a strategy or even narrative of Yale as an anchor.
Kate Cooney (12:02):
So you were really interested in helping Yale think about what else might be possible and as you move toward graduation, you negotiated a position that was jointly paid for by the City Economic Development Office and the Office of New Haven and State Affairs. It was a one year position. What did you set out to do that year?
Boris Sigal (12:25):
Among many of the different spaces that you dive into as a as a grad student, in particular MBA student, there’s so many opportunities to plug in on so many levels. I think I had the good fortune and privilege just to make a lot of really rich connections in New Haven, both, I think, at a higher level at different institutions, but also just spending time at various community meetings and meeting some of the small businesses. And in fact, SOM was right on Sachem, right across from the ice rink. And so that’s maybe three blocks from Dixwell, historically Black neighborhood that has really, you know, you trace the narrative of that neighborhood, this 20th century U.S. history right there, from the Great Migration to all kinds of formal and informal discrimination and capital flight and globalization. And you get just this visceral connection between an institution that has had the good fortune to build up massive amount of economic and social capital. And the reality that, as I said at the time, 80 percent of kids so four out of every five kids growing up in New Haven were in a low income household. Connecticut actually comes up. They don’t just publish poverty rates, they actually figure out in each city how much does a household need to make to make have a modest but stable income. And so 80 percent of kids in the city were well below that line. By just walking a couple of steps from campus, you can see that that conflict, you could feel it really viscerally. That opened up a real urgency and interest to go deeper in this connection and try to wade through some of the complexity of how we arrived there to actually try to get my hands on some area of the institution. And so Yale, as a purchaser, a pretty big force. Any given year, you know, there’s about a billion dollar procurement budget. You take away the stuff like specialized medical beakers that you can’t probably procure in New Haven and depending on the construction, maybe half a billion to 700 million dollars a year in spending. After probably a dozen phone calls to the Chief Procurement Officer, it was John Mayes back then. It was a different individual, it’s structured a little bit different now. Very busy office. A lot of pressure for that position. He finally entertained a meeting, and I think we really hit up on this idea. And John grew up in New Haven area and really kind of understood two different worlds that Yale occupies and really worked with me to set up a deeper dive and looking at how Yale acts as a purchaser and really be able to trace the money and have some questions about where’s the money going, what is the support, what kind of businesses, try to understand kind of what the situation is and what are the trends? There was a lot of insight from that. And then I think after graduation there was an opportunity to continue the learning, but actually get our hands on it, try to actually get inside of contract and see what’s going on. You know, thousands of times over every day inside the university. How are our operational business decisions of a huge institution affecting, benefiting or not the communities around it? I had the chance to work between the university and the city on going deeper into that.
Kate Cooney (15:37):
You did some interesting work where you thought about what you noticed about that one decision to shift to a national purveyor on food. How much money that shifted out of the economy, you know, that might not have been the aim. It was solving a different problem. But the implication was that all that money left New Haven in it as a result of that decision.
Boris Sigal (16:01):
In these situations, I think there are, and it’s important sometimes to find culprits personified that are actually advocating for particular positions, hold the power to make these. But oftentimes, I think these effects are just the natural forces kind of playing themselves out. And so I think I was able to find both in the data. The one example you’re referring to is a strategic procurement challenge of how do you deliver thousands of meals a day to 17 sites and manage all kinds of vendor relationships and the pressure of price and risk and logistics and a big shift in university procurement over the last 20, 30 years has been from a more distributed, you know, this department has its own operation. This department has, you know, another operation to outsource things to a more centralized corporate model of strategic procurement, where let’s coordinate all of this into one contract, into one set of parameters. And so that certainly has created a lot of efficiency and a time how we get better deals, but has also really had effects on how money flows through the region, right. In food dining, there was a shift, I think really accelerated by the Great Recession, but long been planned was to go from self sourcing, so managing nearly every kind of food sourcing relationship to going through a broad based distributor like U.S. Foods. A lot of benefit to that, and price is certainly one of them, but not the greatest one. Being able to handle the logistics and have one truck in multiple sites and have some shipped risk management to somebody else. But a lot of really value created in the broad based distributor, but the broad based distributor is coming with their own sourcing relationships, right? And a lot of that for them is around their logistics game, right? So they’re thinking about who is set up along the exits around the freeway and who can get to those exits as quickly as possible because we don’t want to really go into and certainly I don’t want to go into New Haven to pick up some bread or some meat product that, you know, to process there. And so we were able to see how this this strategy of self sourcing to broad based procurement, I think without the intention of kicking anybody out, you know, slowly shifted what had been longstanding local food relationships to whatever relationships came with the national board liner. And so we saw, I don’t have the slide in front of me, but a drastic probably 90, 95 percent reduction in the amount of money that was staying in New Haven or the region. And I actually came to the broad based distributor and said, “Well, maybe we’re missing something. Maybe you guys actually have these relationships and they’re consolidated under you.” They opened up their books. Yeah. There isn’t a single one in the New Haven region, largely for the reasons, again, not any explicit decision, but that’s just how this kind of purchasing was set up. By going into the data, you were able to find out how a particular business decision or business process inside of a large anchor institution was really pulling millions of dollars from the local and regional economy, and maybe some hours lost here, a couple of jobs lost there. It’s hard to actually point exactly the effect that in cumulative, these are the forces, and we found a couple of other ones and those are the ones that was just visible. But I think more than anything, it was between strategic procurement and globalization and consolidation of companies. The data showed the forces that we knew were playing out daily. It was exciting to see, but also quite heartbreaking.
Kate Cooney (19:33):
So one of the initiatives that you worked on was seeing if there was a way to shift some of that spend locally with some intention with a broader set of considerations behind those decisions. Was food again a place where you found possibility if we have in our audience people who are thinking about how do I bridge this gap between local businesses and big anchors? Do you have a sense that there is a part of the supply chain that’s more amenable to these kind of shifts? Or will it be really different depending on the anchor?
Boris Sigal (20:10):
The way we approached it in 2015, the year after I graduated, was we looked at the data more passively and we thought, let’s actually get inside of these contracts and see what’s going on and what it looks like to be able to shift or not shift some of the spending and to actually try to create a story and narrative around what’s possible and what does it really need. To be able to do that, I had to really focus in on what could I do within the year. If you take a three or five year or a decade long approach that a more strategic top down initiative would do, you can now really start thinking about business capacity and investment and deployment of capital. I started with what’s here already, like what’s the lowest hanging fruit? One was the food service program at Yale, and the other was the capital budgets and construction and particularly facility maintenance. On the food side, New Haven has a deep history of outside of Hunt’s Point, one of the biggest food distribution and processing terminals in the Northeast, and a lot of legacy companies still operating inside of the city, from bakeries to meat processing, beverage companies to vegetable and food distributors, a really rich ecosystem. And so, what we started just through a relationship with the procurement agents at the food dining and their goodwill, at the time is Gerry Remer, maybe she’s still there. And we actually started doing just site visits to various distributors. And actually, it was an organizing challenge, right, you have a set of years of potential business that you could work with and you have decision makers that have a whole lot of faith. And I think it’s took the approach of trying to get people together and actually think about what would it take to make this work and to push when we can and to listen and learn when we can’t. And so we had examples of both happening. We were able to have, got examples around, you know, creating specialty products for Yale, being able to bring some of the food businesses into the broad line distributor. There’s a few examples of success. Overall, you know, did it add up to one or two hundred thousand dollars of new spending? Probably, but not much more than that. So in terms of like the financial impact relevance besides the university wasn’t huge. I think it did create a lot of really good connections and relationships and stories. And also, I think it illuminated a really important role that an anchor can have in this space. I came in so fixated on spend, like how do you deploy a dollar in Yale’s bank account from one place to another place? That’s certainly part of it. It’s being able to drive dollars of spend into a business, create wealth and jobs and promote local institutions and ownership. But beyond that, it was really interesting to see, you know act Yale as a business development partner, helping illuminate and really provide transparency around needs and work with the businesses to try to meet unique needs. And so being able to prepare specialty products for special events, ones that had higher price points were more differentiated, more value added. And I think Yale to me represented more of the kind of market that businesses in a high cost place like New Haven with high rents and high capital costs that they needed to really be able to grow into and there was a great example of the head chef at Yale touring these facilities and getting to know the business owners and really working collaboratively to make products for when dignitaries are coming to Yale or reunion weekends or really high profile events and lend expertise and facilities and bring them on site. And so there is a real business development partnership emerging like how do we co-develop products together, which could certainly help them get into Yale, but also, I think, illuminate a part of the market that these businesses can grow into. And then also, I think, you know, picking up the call and calling U.S. Foods, the broad line distributor and say, “Hey, we need you to get this company into your distribution, even though it’s a pain in the butt for you. This is important for us.” That’s a very different conversation than one of the businesses we worked with had gotten their phone call ignored for, like five years from U.S. Foods. And so that opens them up to Yale and theoretically, the whole distribution network through U.S. Foods. Yes. So there were examples, from an organizer perspective, If you bring these two entities closer together and try to understand what their challenges are and where you can push them together. And there’s a lot of really good examples of what could happen, and they will certainly brick walls that we hit along the way.
Kate Cooney (24:32):
What was your sense of these examples? You’re talking about a place where those alignments line up. Maybe there’s a demand side dimension where those specialty products that are co-developed with local food purveyors can meet a kind of shifting or special demand side taste. Are there places where those relationships with existing contractors are just so strong that it’s really hard to develop a compelling argument around alignment for shifting? Are there other things that you learned about that are important in terms of what are the incentives for the purchasers themselves, for the folks in the procurement office and is shifting those part of how these things can really take off?
Boris Sigal (25:17):
I think both are very true. There’s legacy relationships, but I think those are always in play and those are concerns for the university. There’s certainly issues with legacy contracts and legacy relationships. And when that much money is flowing, you know, a real concern for controls. And obviously the contractors that were at Yale 20 or 30 years ago. There is a lot of advantages to being an incumbent, but as procurement department beefs up and takes a look at more contracts and does more bidding out, I think there’s actually more and more opportunities to introduce new vendors and the interests to get new vendors. Getting to know that the procurement team at Yale was also really important. All fantastic people, super hard working under unbelievable demands and constraints to deliver everything under the sun for very demanding internal clients, you know, departments and chairs and events. And there really are really the Herculean effort to spend the 700 million or the billion dollars a year. Some of the challenges that go into trying out new relationships, everything from kind of benign, just what was the most economical way to get from A to B, right? Like what’s my easiest way, as somebody who has so much on my plate? How do I just get this need met? Right, as a filter. And a very, not just a price standpoint, but the logistics of it and the perception of risk and if the relationship doesn’t work out, you know, who’s on the line, who’s on the hook for it? And then the whole world I think of implicit bias going on. When it’s not purely objective, right? And we don’t have all the information. How are we as humans making decisions on what business is reputable and what’s not? Who’s going to deliver the right product, who’s not. I think there’s a lot of decisions that people make that are based on their own view of the world and the belief about what certain business can and can’t do that you have to overcome. And then obviously, there’s actual parameters of procurement, the size of the contracts, the requirements, the payment terms. When you’re actually trying to make the demand and supply come together and the capacity of a business to be able to service one part of the campus, but not eight part of the campus or really like the worry that can a ten person, small local small business handled the size of this kind of contract, even if they can do it well in one place, can they do it well in eight places. Yeah, it exposed a whole range of challenges, from technical to much more I think cultural. And I think the technical ones, I think, are really heady and require a lot of work to come across. But I think the larger one is the institutional commitment to get the work done that sets the tone for its importance and also gives, I think, an important part of this to give cover to people to say that this is worth doing and that it’s OK to do. And it’s valued, not just rhetorically, but like in the real or perceived risk that this is worth doing. And I think we learn that just some barriers you can’t come across without that kind of top-down leadership.
Kate Cooney (28:22):
I wanted to ask you about the work that you did for the Center for New Haven Works and that here’s another position where you were working at that intersection of community organizing and anchor-based development. What did you learn about the kind of grassroots efforts to move an anchor into, in this case, the anchor acting as an employer and hiring from within the city limits, even from certain neighborhoods that had been historically marginalized in the region and through many years of organizing resulted in some commitments. And you, while you were at New Haven Works, you were overseeing some of the processes that were meant to fulfill those commitments. What did you learn about that dynamic between organizing and institutional change? And then the work that needs to continue as you go to even once you’ve gotten a commitment, make those shifts in in practices.
Boris Sigal (29:25):
In 2012, I believe, or 2013, Yale made a commitment to hire 1,000 New Haven residents, including five hundred from the neighborhoods of need from very specific census tracts and zip codes. And this is the most radical and most impactful anchor-based community wealth building commitment that at least at the time, but I mean, I’ve been following the field pretty closely, I can’t quite match and this is into full time regular jobs and not just tied to a construction project. So very direct, very focused local hiring campaign that I had the privilege of helping for a few years. And it’s impactful because Yale jobs are really good. If you have a job, if you have a full time permanent job at Yale, you have a connection to a middle class experience through benefits through vacation through pay through access for your kids, social capital. And those jobs historically have been really hard for New Haven residents to obtain. And so unpacking exactly why, I think a lot of reasons behind that including, you know, if we think there, a lot of subjectivity in how purchasing decisions are made, those incredible subjectivity for how hiring decisions are made. And so, you know, that at play over and over again, I think led to this system that the best jobs in the region were largely inaccessible to most and many New Haven residents. And then the impact of one. We did an impact analysis, just a rough back of the napkin calculation of what one and then scaled up to five hundred neighbors that meet at a thousand New Haven, the kind of direct and indirect impact, economic impact in neighborhoods. I mean, I think it was I don’t want to quote the wrong numbers, but it was so much larger than any other kind of intervention, from housing to business, anything else. It was just, I had to rerun the numbers a couple of times. This is the kind of the difference between a Yale and non-Yale job in that community is enormous. I’m sure that at some level at Yale, there’s recognition that more New Haven residents having good jobs is connected to the well-being of our institution. But a lot of it came on the heels of 20, 30 years of organizing at Yale, organizing first by clerical workers to form a union in the 70s and then organizing connections between local clergy in New Haven. Recognizing that, you know, Yale, such a powerful institution, workers need as many allies as possible to be able to collectively organize and negotiate and a connection between New Haven communities and the Yale workers supporting each other, being able to unify and bargain against them with Yale. And then also New Haven asking, “Look, we’ve been supporting union organizing for a generation here, but the membership continues to be largely non New Haven. And so how do we use this very unique position where you’ve negotiated essentially some of the best university jobs in the country? How do we have that actually help and go to the people that where those jobs can be most transformative?” And so that all culminated in the hiring agreement in 2012 and a whole institution set up around managing and tracking and trying to see what’s actually happening when hiring is going on. But it’s certainly an anchor-based community economic development intervention. I’d argue one of the, you know, one of the most audacious in the country to date, but it really came from a real, sustained effort by community members and workers for a generation to even get to the to get to the starting line. And there’s one pathway by which, you know, big change happens. It’s this real, sustained, organizing push and a real rich story that many people in New Haven are much more equipped than me to tell. But certainly, I think, one of the most powerful examples of local change that I’ve been witness to.
Kate Cooney (33:26):
So let’s switch gears to thinking about the work that you’re doing now. Now you are the CFO of the Community Purchasing Alliance. Tell us about how that work is in some way another approach to anchor-based development.
Boris Sigal (33:41):
A community purchasing alliance cooperative is a member owned cooperative in D.C. about 85 nonprofits, churches, congregations, housing centers, retirement communities that band together to purchase goods and services that are really around their facilities. A lot of these have old, complicated facilities to manage while they’re doing many other things. So the basic business model is to come together and try to get better contracts, better terms, better protection as consumers in the market. The larger aspiration really is the cooperative identity. It’s creating a space for institutions to be honest about their challenges and needs and to ask, “What does it look like for us to work together on those needs?” And so each one of the institutions not a major, although we work with some of the big ones, but KIPP DC and about 30 other charter schools and a few large retirement communities and some of the largest congregations and temples in D.C., no one alone really is an economic behemoth like Yale. We start with what are your most pressing needs? And how can working together solve those pressing needs? Whether finding new vendors or getting better terms, a better reliability, better pricing, and then really develop a space in our relationship to try to push deeper. And I think one of those areas as and every one of the institutes that we work with is an anchor, not a hospital university, but they’re a school in a particular neighborhood or they’re a congregation serving parishioners in a particular area or they’re a housing center. And so they have a calculation that’s not that different from Yale, that they’re deeply tied to the well-being of the communities that they serve or that they reside in. We don’t start the conversation largely because of the complexity of their needs and the capacity they have to even think about it. We often start with how can this cooperative be a relevant space for you to strengthen your own institutions? But over time, as we are doing more and more work together, you know, we’re able to ask deeper questions around how we’re, the same ones that I think I was asking Yale, which is how are the decisions you are making day to day, who is that supporting? Who are the employees that are fulfilling this? What are the employment practices that they’re adopting? And ultimately, how does that help your students or parishioners or employees? It’s not a wholesale transformation of the way they do purchasing, but I think on a case by case basis, what it adds up to is something I think pretty staggering. And so, I joined up now three and a half, almost four years ago, and I don’t think I appreciate the magnitude because, you know, at Yale you can map out, you know, get $700 million if you just shifted like one percent over the next couple years. It would be a huge impact for the city of New Haven. There isn’t any one entity of the community purchasing alliance cooperative where if we were to shift five or 10 percent, it would transform a part of the city. But collectively, you know, as we, as we gather our spend data in a macro level, we have about $18 million that gets purchased through the cooperative. Last year, 55 percent of that, so I think over $9 million stayed with local minority owned businesses or businesses owned by people of color in D.C. or immediately around it. If I stack up my experience at Yale, putting up a real push and fight to try to shift as much money as I could in a year and working with a team inside and outside of the university. And I think maybe we got to a quarter million dollars and then seeing what a group of 80 members and then some institutions that aren’t members yet, so you have to say, maybe 100 to 120 organizations in D.C. are able to do collectively in the kind of impact and how that dwarfed it on so many levels.
Kate Cooney (37:27):
What are some examples of how these cooperative purchasing contracts led to local business development?
Boris Sigal (37:34):
Some of those examples where they play out is some of the facility service contracts. We had a lot of the charter schools we worked with were, security is such an issue at schools just because what you’re looking for from a security guard is so different from what you’re looking for at a front office, right. A front office is somebody who looks at your I.D. They sign you in, and they let you go. Here, you’re dealing with really complicated social dynamics and like an age that’s really complicated to manage. And so you’re looking for much more than just a presence in a physical space, but the ability to actually pick up on social cues and what’s happening. And so all of these schools have been hiring national firms. And not only were they paying a lot of money, but it was just like also unreliable service that couldn’t discern what needed to be resolved and what needed to be talked to and through a connection there was an opportunity for one security company that had been trying to break through and get a connection to KIPP DC for a few years that had been doing events. That was started by a gentleman who had been a football player, one of the D.C. public schools, and he had a few classmates and football players that had worked with him for an events security company. And he understood the dynamic inside of D.C. schools really well, and he also understood security really well, and there was an opportunity to introduce him to KIPP and think constructively of KIPP on how to like try out one or two campuses and create an opportunity for this. At that point, three person company to succeed through that relationship, this security company was able to really excel in those two spots and through the cooperative, you know, as we started doing more and more bids for security, fewer and fewer were interested in the national companies, more and more interested in the success story we are seeing on the ground. And so we were able to say, “Hey, did you hear what was going on here in these two campus?” And like, “Oh, we’d love to try that.” And so I think within two or three years, went from three full time and a few part time employees to over 100 full time employees. And so you were able to actually see the millions of dollars being shifted to employees to a small business owner who really, you know, spent a lot of time at his office. This is a family for him and really like, you know, just the qualitative side of local ownership. The large anchor based economic development model still has enormous potential, and it’s being pushed into so many different places, particularly with hospitals now and the connection between public health. And it’s going to be a frontier here for the next generation, for sure. But I’m also appreciating that there’s a ton of power in smaller institutions working together, a lot of power for their own self-interest, but also a lot of power for the kinds of questions we’re asking in terms of the kinds of economies we’re supporting and local and regional areas and who’s benefiting from that and the kinds of opportunities that are being created plus access to those opportunities. I’m optimistic because the national conversation we’re having over the last year, I think fits right into this. I think everybody’s asking about what’s the connection between myself and the institutions I’m apart of. And the reality that’s happening in my community. So I think we’re hoping that the cooperative and this kind of cooperative model is one set of ways that we can make a real impact, a real response to these really pressing questions.
Kate Cooney (40:43):
I wondered what you’ve learned about the technical assistance, were you engaging on the TA side as well? Is that something that you do or found yourself doing? And what have you learned about what can be helpful?
Boris Sigal (40:58):
In theory, there’s a huge opportunity to connect market access, which is, I think, where these kinds of interventions the demand side really is about. If you think about what does it take to get a business successful or actually getting them business is a big part of making them successful. We’re planted in that, the work I had in Yale was planted inside of that space, there’s obviously a massive opportunity to connect business development and technical assistance support side. If I’m being honest, we don’t have anything formal that we do around that. I’ve jumped in a situation where there’s a very particular contract, a particular customer in a particular business that has a technical challenge like time-sheeting and billing was like a challenge for one security company at one site. And so I actually jumped in and got on the phone with the school, with the business owner. We need to figure out that. It was a very technical challenge. We need to figure this out, if this is going to work. And so we were able to jump in and just through the unique circumstances, make it work. But you know, there is no kind of overall strategy. Just if there’s a barrier to making the contract work, we try to do what we can to overcome it. But I think in general, there’s a massive ecosystem for small business assistance and technical assistance. It’s my belief and experience that that’s most useful when it’s tied to very specific challenges and very specific opportunities, and that there’s a real danger in having that drift more into kind of generalization and abstraction that like generally, we want you to know how to do this or that. There’s a lot of things that are important, but usually there’s a real opportunity cost to time and attention. And I think a big challenge of technical assistance is how to make it the right tech ecosystems at the right time delivered by the right people. I think that’s really, really, really, really hard to get right. My belief is getting it as close to the transaction as possible and using that tied to a very specific opportunity is best. I know there’s a lot of very smart, capable, and driven people trying to work on that.
Kate Cooney (42:55):
As we wrap up, what do you see as the kind of leading edge opportunities in this space and challenges?
Boris Sigal (43:03):
I think the anchor-based community wealth, I forgot who brought up this analogy, but maybe it was the Democracy Collaborative or another entity that compared it to sustainable practices and green of the 70s used to come into a university and say, “Let’s talk about green practices” And be like, “What are you talking about? Green, green, what?” And now you have the sustainability office, you have metrics, you have your compensation time, you have a whole infrastructure tied to it because it’s been so thoroughly internalized. I think we are now in the maybe early eighties of sustainability in the anchor wealth building space. And I think a space that’s emerging that’s going to really and already taking it from ideas outside of the institution to the C-suite to actual practices with healthcare institutions. And as there’s more push into shifting from fee for service to value-based or health outcome based compensation models, it’s a real business case. There’s a much more direct business case between population health and the financial well-being of the hospital health system. When you get serious about population health, community wealth building’s right at the center of it. What is upstream virtually any health outcome? It’s economics and the stress that’s induced by it. I think there’s a real frontier working with health systems and their affiliates in really pushing and institutionalizing it. You know, it will be a decade or two I’m guessing of a similar kind of progress before we’re, where we see dedicated offices and metrics and conversation, all this kind of stuff. But already, you know what I’m seeing the progress made in the last five years of things rolling out. And the challenges, I think, are people, who wants to take this on as an organizing project? There’s a real technocratic side of it and like, you got to get a lot of things right and there’s massive complexity. And it’s kind of fun to live inside of that complexity, that at the end of the day, like, who’s going to roll up their sleeves and push for this? You know what are going to be the groups that are going to take this on and push from the outside, who’s going to push from the inside? And is going to roll up their sleeves to actually make this work on this on a case by case basis and start getting the gears going? Who’s going to make the right contacts work? Who’s going to make the business work? Who’s going to like take ownership over this? Once you get to the starting line, you really need, you know, ownership and organizing and push to get this done, and it’s massively interesting and exciting, but also very challenging, and you know, it can be intimidating and audacious, but well worth it. And really, I think one of the most promising ways that we can tackle the most relevant questions that most of the cities in this country face for the next generation.
Kate Cooney (45:54):
Thank you so much, Boris. We appreciate Boris for all the good, hard work he did on these issues when he was here in New Haven and the opportunity to hear him reflect on that work with us today. Next week, we begin our final set of episodes for season three, which all focus on entrepreneurship, financing, and entrepreneurial ecosystems. In episode eight, we talked to Kylie Jiwon Hwang about her work on the role of entrepreneurship in a career trajectory and in particular, the role of entrepreneurship for individuals with a criminal record. Stay tuned.
Manuel Morales (46:33):
This podcast was created by Kate Cooney in collaboration with James Johnson-Piett and the students of the Spring 2021 Lab.
Eun Sun Cho (46:41):
All engineering and production by Ryan McAvoy and Kate Cooney.
Kate Cooney (46:46):
Special thanks to Rhona Ceppos for administrative support and to Ryan Carpenter for assistance with Zoom.
Eun Sun Cho (46:52):
Music from the album City Trees, composed and performed by the artist K-Dub.
Manuel Morales (46:57):
For more information and show notes, visit our website at IEDL.yale.edu.
Eun Sun Cho (47:04):
Thank you for listening.