Are you and your business prepared for the power of the CDS? The Cultural Demographic Shift (CDS) is my organization’s term for what happens when large cultural segments of the population reach critical mass or numbers sufficient to have a significant effect on what we do and how we act.
According to Nielsen, diverse, or “shift populations,” are projected to represent 54 percent of the U.S. population by 2050. But we’re already at critical mass with those populations -- what we traditionally call “minorities” or “multicultural populations” in the U.S. (i.e., nonwhites such as Hispanics, Asian/Pacific Islanders and black Americans). Hispanics alone will account for 30 percent of the U.S. population by 2050, a projected increase of 167 percent from 2014. The Asian-American population is expected to grow 142 percent during that same time, black Americans 56 percent and whites (non-Hispanic) only 1 percent. According to PBS NewsHour, just four states were majority-minority in 2014 (places where shift populations are a greater percentage than whites). By 2060, there will be 22 states.
These shift populations not only represent the shift in cultural demographics in the U.S., but they’re introducing “paradigm shifts” that are influencing reinvention and innovation (new ways of doing things) across all industries, products and services. The influence of shift populations is compelling all industries to serve the needs of larger, broader populations of employees in the workplace and customers in the marketplace and also impact how external partnerships are defined and formed. They’re forcing organizations to engage more authentically, embrace diversity of thought and consider strategies that break free from existing templates to evolve in new ways to create distinction and enable sustainable growth.
Let’s take a look at a recent example of a business leader who understands these new customer populations and how they want to be served.
As chairman and CEO of Magic Johnson Enterprises, Magic Johnson has proved to Sony, Starbucks and many other brands that urban neighborhoods aren’t an investment wasteland. How would they know that the demand for products and services doesn’t already exist in these neighborhoods? None of the C-suite executives at Sony grew up in or go to the urban neighborhoods that Magic is connected to. He saw how people there had to drive more than an hour outside those neighborhoods to get quality services and goods. Using the first characteristic of the innovation mentality (seeing opportunities in everything), Magic saw a way to bring Fortune 500 companies looking for growth to drive ROI in urban America -- as long as they were willing to adjust how they came in to those urban neighborhoods.
As Magic told leaders from Fortune 500 companies across the U.S. at my summit, “Preparing U.S. Leadership for the Seismic Cultural Demographic Shift,” “Urban America is different. You have to tailor to fit in … But before you go in, you have to talk to the people. Explain why it’s important to them. You have to educate them why the brand is important -- why your brand is going to make their lives better. I didn’t try and create demand. Demand was already there. I understood what the people wanted and then over-delivered on it. Do that, and they’ll become loyal customers and make you money.”
Consider Sony, Magic’s first target. He knew minorities were the number-one group of people going to the movies, but there were no theaters in the black neighborhoods of Los Angeles just a few miles from Hollywood. So Magic approached Peter Guber, then chairman of Sony Pictures, and offered a partnership: If Sony would deliver the theaters, Magic would deliver the customers. The naysayers said it wasn’t going to work, but Magic practiced what he preached: He went in before the theater opened. He spoke at churches, neighborhood councils and community groups. He explained why Sony was coming, why he was involved, and how they were going to provide services tailored for urban consumers and jobs for the neighborhood.
Not that Sony listened to everything Magic said -- at first. When the food service providers refused to listen to him and gave his theater the same amount of hot dogs they gave suburban theaters, they sold out in a weekend what it took to sell out in a month in suburbia. Magic knew what Sony didn’t: Minorities don’t go to dinner and a movie like suburban customers -- they eat at the movies. More hot dogs soon arrived to be washed down by grape, orange and other flavored soda that Magic knew urban customer preferred. The result? “My per caps were so high, we had the highest food sales in the industry,” Magic says. “We became a top-10 national theater for the Sony chain in the first year. All because I understood that if you understand the people and you deliver what they want, then you’re going to be successful. You can’t do urban America from the corner office 3,000 feet in the sky.”
Of course, Magic Johnson is a celebrity, as well as a beloved and exceptional basketball player and human being. But his use of diversity of thought to leverage his personal brand and develop a platform for change makes him much more than your typical celebrity sports spokesperson: His work goes beyond the wonderful but limited effort of many athlete’s charitable foundations. That’s because Magic was a partner in those businesses. That stake made his work was far from charity. It was about providing jobs and services for the communities he cares deeply about.
Because Magic listened, he knew that the people his business employed and served weren’t loyal to a brand because it was chic or it elevated them; they wanted societal advancement and a connection to the brand’s story. In the same way consumers want to know the story behind the products they’re buying, shift populations don’t want to be sold -- they want to be educated. They want to feel they can advance. If they’re not advancing, they can’t continue to grow.
Magic’s conversion of a demand in the CDS to sales comes down to one thing any leader and business can do: He embraced the six characteristics of the innovation mentality: He saw an opportunity for growth, anticipated the unexpected by talking to the community, pursued his passion for people from the neighborhood, showed his entrepreneurial spirit right down to the food being served, worked with a generous purpose for both the community and his business partners and left an undisputed legacy that brought business to urban neighborhoods nationwide.
Most leaders and businesses don’t hear their own “magic” and are “siloing” demand that already exists, thus missing significant investment and growth opportunities. They’re listening to the same things over and over, so they fail to see the unique differences and uncover their business’s full potential.