McKinsey Institute for Black Economic Mobility

Diagnostic approaches to support community-based racial-equity efforts

| Interview

In this first installment of the McKinsey Action 9 Fireside Chat series, consultant Neal Stewart hosts a conversation with McKinsey partner Darius Bates and consultant Emma Livingston about the value of using a place-based diagnostic approach with community members seeking to address racial disparities in their communities. Prior to joining McKinsey, Livingston worked with various entities focused on social change, such as the Harlem Children’s Zone, ExpandED Schools, and the Office of the Mayor of the City of New York. Bates leads action 9 of McKinsey’s 10 Actions toward racial equity and has done extensive work in McKinsey’s Transformation Practice. Together, Bates and Livingston are working to apply the same principles that underpin work in the Transformation Practice to drive social change for communities. In this chat, they discuss these topics:

  1. McKinsey’s commitment to racial equity through the 10 actions and the action 9 commitment of $200 million in pro bono work over the next ten years to advance racial equity and economic empowerment among Black communities globally
  2. a recent article that details how to use a place-based diagnostic approach to create social change
  3. advantages and considerations for using a place-based approach to target racial inequity

This transcript has been edited for clarity and length.

Neal Stewart: Hello, and welcome to McKinsey’s Action 9 Fireside Chat series where we will have conversations that highlight efforts across the racial-equity ecosystem, across McKinsey colleagues, and with people working in communities across the country. My name is Neal Stewart, and I am a consultant in McKinsey’s Washington, DC, office.

Before we get started with today’s conversation, I want to give some background on action 9 and the 10 actions more broadly. In 2020, McKinsey put forth a public commitment to antiracism and social justice through ten specific actions. Drawing on our core areas of expertise, we focused on building Black leadership within our organization and beyond, identifying solutions through database research, and investing in social change within our wider community. We know we have a long way to go on our journey, but we are proud to support the leaders, businesses, and communities working for a more just and more equitable society. These fireside chats will focus on action 9 of these commitments, which is our pledge of $200 million toward racial equity and economic inclusion among Black communities. One of our core pro bono investment areas so far has been place-focused work, and a group of McKinsey colleagues have been working on an article that outlines our approach and our key learnings. Today, we are joined by two of the article’s key contributors: Darius Bates and Emma Livingston. I am going to turn it over to you to introduce yourselves. Can you each tell us a little bit about your background, and what makes you excited about place-focused work? Darius, why don’t we start with you?

Darius Bates: Thank you, Neal, for the great introduction. I am Darius Bates. I am a partner in McKinsey’s Atlanta office, and I’ve been with the firm for some time now, working primarily in the transformation space. I’ve gotten really excited about the work in the place-focused space in the past few years as I’ve led the charge to help McKinsey begin to think about ways we can bring the best practices from our transformation approach, which we use with many large organizations, to use in the context of community transformation and change.

We have taken those learnings. We have tried to apply them. And we have tried to publish around that work, which we are going to discuss today with the article that we have produced. We are trying to get the word out there to help folks who are good-faith actors trying to drive positive change be more effective in their work.

Neal Stewart: Awesome. Thanks, Darius. Emma, introduce yourself.

Emma Livingston: My name is Emma Livingston. I am a consultant in McKinsey’s New York office, and what makes me excited about this [project] is that I actually spent some time doing place-based work outside of McKinsey with government and nonprofits. It’s been a real privilege to take that work and apply it in the context of what we do at McKinsey and to see how we can work with our clients to really do more of that work, help accelerate it, bring some of our expertise, best practices alongside the firepower we have in this fantastic organization to bring new insights, work with new people, and have new folks around the table. That is what we have been doing for the past 18 months, [almost] two years. And it has been a real privilege. It is exciting to see this work carry on the journey and see how clients are using it.

Darius Bates: Before we jump in too deeply, I will say I have tricked Emma into working with me for quite some time over the past year and a half, which has really been a lot of fun. We have learned a lot together, so it made a lot of sense for us to collaborate on some of the work we have done here. In my work leading action 9 for the firm, we have spent a lot of time thinking about how the firm can think differently about its role in driving and supporting this work. Emma has helped our team immensely in that process, so it is fun to do a conversation like this with her.

Neal Stewart: Kudos to you both for the work you have done so far, and I’m excited to hear more about it in our conversation. Let’s start at the beginning. The article itself is about using local insights to inform US racial-equity efforts. Why was it important to write this article? And who is it for? Darius, why don’t we start with you?

Darius Bates: As I mentioned, a lot of what we have been thinking about over the past year or so is how we can take learnings from our transformation work and bring them into the community transformation space. When you think about how we approach large-scale transformations, we typically approach them in three phases.

The first phase is focused on understanding the current state of things for an organization or, in this case, for a place. What is the state of racial equity, and what is the opportunity for improvement? The second phase is around building plans that can drive the type of change a community or an organization looks to achieve. The third phase is about executing those plans. We wrote this article to share learnings around how we think about that first phase, when we’re trying to understand the current state of equity in a place.

We have put together a set of views that can create a good starting point for a community, for example, by asking, “How are we doing across a number of dimensions of equity?” We put that together internally because for US cities where we thought place-focused work could be very impactful, we ask, “Doing what McKinsey does well, can we take a look at what the current state is so we know the lay of the land? But as we began talking about this with folks, particularly folks in those communities, everyone reacted with, “We did not know you all had this. We have not seen anyone put something like this together.” These pieces of data have been out there, but they have not been combined in this way. One way we can radiate this more robustly is to print an article.

Neal Stewart: That’s really helpful context. We have talked about place-focused work; we have all mentioned it so far in the conversation. What is place-focused work? We know action 9 is focused on efforts to drive transformational change within communities. What role is McKinsey playing as these communities embark on a journey of transformation? Emma, I would love to hear you start this one off.

Emma Livingston: There are two questions: What is place-focused work, and what is our role there? You hit the nail on the head. We are trying to drive transformational change within communities—emphasis on within communities—so we cannot think about that community without thinking about the place where that community is. If you look at the academic literature on equity and social mobility, place matters a lot. We know that. It does not make sense to try to understand the issue without understanding the context in which that exists: it is the city, it is a neighborhood, and sometimes it is a literal street. By taking a place lens, you gain the ability to understand the interconnection between issues, between things that matter for equity that intersect in people’s lives in ways that you can’t draw clean lines around, to see how they interact and start asking questions about what if we did this here? That pulls on that thread as well. Our first point of doing this work, as I said, is [to gain] the understanding, so taking a place lens first and foremost on that understanding helps us drive through and actually create impact. First, place matters, and we are going to start working through that lens. In terms of our role, in this first piece, we are helping with the data. It is diagnostic, it is understanding, and this is not new data; it is data that are out there. We are trying to help people digest it, bring it to new stakeholders, bring it to folks who are not academics in the field, to folks who are on the ground doing the work to help them understand issues in new ways to prioritize things, such as which stakeholders to bring in. We are all partners in a much bigger journey, but first and foremost is that we can help get some of the information.

Darius Bates: That makes a ton of sense. The one thing I’d probably layer on top is that when we think about that first phase, it’s actually important that McKinsey comes in and brings an independent perspective. If we were working with a traditional organization and we were doing a diligence of opportunity, we would tell them we have to use their data to get an understanding of where they are and to bring it back to them. If we ask our clients, “What do you think the opportunity is,?” they tend to undershoot it by about two to three times. We are bringing that same approach when we think about what is going on in a community. We are stepping back and saying, “Whether we are in this community or not, here is what the data say.” Then you start a conversation with members in the community and ask, “What does that potentially mean for action that you as a community member want to take?” Once you get beyond the first phase, when you’re trying to understand the challenges and you’re trying to think about a shared aspiration, then the community has to move more into the front seat because then they’re going to begin thinking about initiatives they may want to plan to change their community or to drive better outcomes for residents in the community.

Then [those community members] have to actually own the implementation. That is not something that McKinsey can own. It is a long-winded way of saying our role shifts over time. But in that early phase, we have more of our hands on the wheel to try to help people understand the lay of the land in their given community.

Neal Stewart: That makes a lot of sense. Darius, I want to dig into one thing you talked about as we think about stakeholders: this shared aspiration that we have with them. We talk a lot about the aspiration to improve equity. I am curious if you can talk about, in the context of this work, what is inequity and what does it mean to work toward that with communities?

Darius Bates: When we think about equity more broadly, it is important to distinguish between equity and equality. While equality might assume that everyone is treated the same, equity tries to take into account people’s unique circumstances. We think that’s important. In the context of this work, the way that we think about equity is looking at the different outcomes for different populations and saying does it look like folks are having the same likelihood of outcomes in their communities? And if the answer is no, then the work does not necessarily answer why, but it might prompt us to go look at what is underneath that. What I will also add is that it is important to note that in this work, while we are taking a snapshot for a community of what their current equity outcomes look like, what this work was not trying to do is unpack all the reasons why the inequities have occurred in a community. That is really important. We said earlier in this conversation that this work provides a starting point for a community, as we begin to think about changes that [the community] wants to make. Once they get to a point where they say, “We know what our aspiration is, and we know where we want to focus to improve equity,” they are going to have to do more work to understand root causes because that will inform how they might unwind some of these other inequitable outcomes. That is what is really important as we think about our article. The article is a point in time for communities where they stand looking at specific communities and how they fare relative to each other.

While equality might assume that everyone is treated the same, equity tries to take into account people’s unique circumstances.

Darius Bates

Emma Livingston: I also think that these are sensitive topics, even more so than the work we do with businesses. These are deeply rooted issues, and big questions and emotions come on high, and we’re trying to give people the language to have that conversation in ways that allow best faith to enter. We have seen that folks who really do want to have these conversations do not always have the tools. It has been exciting to be a part of giving folks those tools.

Neal Stewart: Building on that, Emma, you talk about being able to help folks have these conversations, and we also mention a fact base that often means digging through data, which, depending on what is available to you, can be an easy process or a tough one. Is it difficult to get good data on the state of equity across geographies? You mentioned earlier that it is not new information, but talk us through the process of actually getting through that data and then bringing the data to communities.

Emma Livingston: There is no perfect data source that says equity is 5 percent of this and 2 percent of that. It does not exist, but there is a lot of data out there. We took a view that there was more value add in taking the information that was already out there and making it more digestible, making it more comparable, putting it in systematic ways where we say, “We compare you against peer cities that look like you, we divide up the neighborhoods in ways that make sense to people who live in those neighborhoods, and we have a common set of metrics that we use that can be stacked together and are holistic as well.” We have really focused on that, and making that the format is meaningful and understandable to a broad range of stakeholders. We want it to be meaningful for folks where this is their day to day, and they say, “Well, we’ve always known that,” and for people on the other end of the spectrum who have never touched this at all but want to get involved. Trying to make that digestible across everyone, that was the first aim. Then we start to supplement with other sources, both from the federal government, such as hard data on housing or FBI crime data, and then nonprofit data, more academic data. Opportunity Atlas [a publicly available data source] shares a lot of data that is very helpful that we also pull in. Vera Institute and others also have publicly available data sources.

We take all of that and then, where it makes sense for the city, we add in much more local data sources—educational data that is specific to that place or other infant mortality data. We had much better data on a local level than we had from the CDC data. It is putting those sources together and not making people have to do the work. If you want to make an impact here, wading through all of those things individually is so hard, so when someone says to you “What should we do,?” how are you possibly going to answer that question? That is what we really are trying to do, to say, “Well, here is a bit more of a dashboard to look at. Here is a systematic way to think it through.” To start to have that conversation, to say we can see in our city compared to cities like us: we are doing good on these dimensions and bad on these; why is that? Or we can see that in this part of our city, the inequity is X but is this in other parts of our city. Why is that? And again, we do not give the answer in this work but have it all in one place in a way that we spent quite a lot of time thinking about, “What does this mean for folks,” and making this not academic. That hopefully gets you much further, far beyond having to read 15,000 sources yourself. We want everyone to engage and to pull forward for impact.

Neal Stewart: In your response, you just talked about taking some of the data and in some instances going to community members and saying, “Hey, what does this look like for you?” I would imagine that after you bring all of this data, to Darius’s earlier point, you’re trying to help make community members understand, “What is this story here?” and “What don’t we understand?” Can you just talk about what it is like to go into communities and make sure that those lived experiences are in combination and in tandem with the data that you are providing to communities?

Emma Livingston: That in many ways is the harder part of the work. I can sit here and pull this data source and match it to this, etcetera, but then you are not going to ask the why. This data does not tell you the answer to the why. People who are living it are much better able to do that, as well as the literature on the causality and things like that. What we found is that when you’re moving from this diagnostic phase into, “Okay, what do we do about this,?” and planning initiatives, that’s when you really have to say the data suggest this is a problem, and some will say, “Yes, of course this is a problem because this is a thing that I see or that doesn’t surprise me at all,” and they add a bit of nuance to the answer. There are myriad ways this is true. We were working with one midsized city. They started to be interested in gaps in savings and wealth and therefore gaps in income and job market participation. We then go on to say, “Why do we have these gaps?” We have these gaps because people cannot enter the job force because of the high costs of childcare. We started to have those conversations. From having those conversations, folks in the childcare sector joined the conversations and added that next level of nuance. They added that the reason we do not have enough childcare is because we do not have enough childcare workers. Now anyone who is working in childcare for even two seconds knows there is a crisis of childcare workers; it is not inspirational, but it leads you down a new route where if you care about this thing, then you need to care about this and this. Instead of asking people why aren’t you doing this, it adds that extra lens that we cannot get with just the raw data. What I caution with this tool, as well as saying it is really powerful, is it’s a start. It is always going to be the start, and there can never be isolation of people who actually do this and explain this. There are also things it cannot pick up, things that are not well measured on data. One example is we have combined it in some ways with robust surveys, robust community interviews, and community diaries to people who add a “this is what it feels like to live here” dimension. “Do I feel welcome downtown? Do I feel like people like me? Do I feel like my neighbors respect me? Do I feel like I am part of this community,?” which is a core element of that place-focused approach around what does this place feel like? What does this place mean? That is much harder to measure on these sorts of standardized national metrics. But the color of that experience is critical to the equity story.

Darius Bates: This just reiterates the point that while in the article we talk about leveraging currently available data to develop new insights you also have to create new data. You are likely going to have to talk to folks. You might do some surveys, or at least leverage surveys that have been done, because a lot of folks are tired of being surveyed. You might have to think of other ways to try to get people to volunteer data. Folks are creating more data than ever before, and they are giving up more of their data voluntarily than ever before. That does create unique opportunities to better understand communities. Those are things that in-person stakeholders have to think about in the future as they try to do a better job of understanding what they want to impact. Then if they start trying to impact the change, it is important to know whether or not it’s working. You need those leading and lagging indicators, and a lot of times census data cannot play that role; the census data are not refreshed often enough for you to understand if your ground tactics are actually having the outcomes you seek.

Neal Stewart: In the article, you mentioned a few different ways that equity can be looked at within the city. We can look at gaps within the city itself, gaps across neighborhoods, and then we can evaluate relative to peer cities and then bring that whole analysis together. Emma, I would love to turn to you first. What does it look like to learn about the current state of those gaps within a city?

Emma Livingston: I think one of the more fundamental views is looking at the overall city, how would you define that? What is the size of the equity gap between folks who are Black, non-Hispanic White, and then Hispanic and Latino? By having those first few, you establish a common fact base against dimensions, and we start to see how inequities build up over time with different metrics and different dimensions of people’s lives. It creates, especially for people who do not live it, a much fuller picture of what that feels like, what that looks like. No one is surprised at inequities, but the magnitude of them often shocks people because you hear anecdotes of individuals, but when you see it all together, it feels much more powerful. It lays the groundwork and says, “In this city, if you are Black, you are X times less likely to graduate from high school, you are Y times more likely to be unemployed, you are Z times more likely to not own your own home.” Neutrally saying that as just a factual statement helps kick off the conversation.

Darius Bates: What we also end up doing as part of the conversation is laying those different impacts out on the timeline of all of a person’s life in that community. What you realize is they are facing these headwinds through every stage of their life. It is also worth noting that a lot of comparisons that we’re making in this work is for the Black community or the Hispanic community to the non-Hispanic White community. We’re looking to see where there are deviations, largely because in most large metropolitan areas, the White community is the majority. Also, in most of those communities, we are seeing that they are doing significantly better than minority communities. When we talk about the gaps, those are the gaps we are actually showing. In the article, you will see some of the visualizations that we are showing that expose those gaps and create a starting point for the conversation around why the gaps exist. And do we think it is important in this community to try to address the gaps?

Emma Livingston: What we see that is very interesting and unsurprising is that place really does matter, and places that are next to each other can have starkly different outcomes, typically highly correlated with the racial and ethnic dynamics of that place and the demography of that place. This is why we need to look at it at the right level, because when you zoom out too much, you miss that granularity, you miss that nuance of what’s actually going on in that community. Those needs can also be starkly different across communities. While what we do tend to see is a neighborhood that is doing poorly in one dimension tends to have a lower score across a range of [dimensions]. These things reinforce and sort of support each other. There are nuances, and those nuances do matter when you start to have conversations about what can we do about this? Why is this happening?

Darius Bates: Partly, what that also gives you is an opportunity to look at where resources are going in communities and whether or not those resources match up with what actual data say about the gaps. In one neighborhood, you may have spent a lot of resources and time toward health outcomes, then you find out that is not actually where most of the resources are needed for health outcomes. And you can ask why. Why are we so focused on where most of the resources are needed for health outcomes?

Neal Stewart: We’ve talked about analyzing the community itself. We’ve talked about doing a comparison between neighborhoods. Can you talk about why it is important to compare inequity across separate geographies? Why would you look from one city to another to understand the magnitude of inequity?

Emma Livingston: I think there are a couple of reasons. One is that you look at a number and say, "Is that it?" Being realistic, for everything we look at, there is an inequity. This is not an equal country. That is why we are here doing this work. You need to normalize it. That is partly why we normalize across the metrics and neighborhoods, but comparing across cities helps. So that’s the first point—just helping to contextualize and understand the data. We look primarily at how your city is doing overall on this metric. What does access to mortgages look like overall in your city? What do educational outcomes look like overall? What does access to parks look like overall in your city? And then comparing that to someone who is statistically like you, and we are also able to tweak out things like culturally, geographically similar places, trying to take people in similar parts of the country, similar size, similar economies, similar demographics and say, "These ones, we’re doing better than them." Actually, yes, you have a homelessness problem because everywhere has a homelessness problem, but compared to peers, you’re doing better, but you’re doing way worse on educational outcomes. It allows people to understand some of those metrics in the context of people who are kind of like me: Are they also experiencing those issues? Then we start talking about interventions. You can start to have a prioritization conversation: Someone else has already solved this, and we are doing worse than them; can we learn from them? Is there an opportunity to actually make an impact there? If it is terrible everywhere, do we want to be the people who say this really matters? We want to be the people who focus on that and be the leaders, which is another possible outcome. But having that context within to make that informed choice is important. And, finally, there is a narrative point that matters. Cities, neighborhoods are competitive in some ways, and people are going to have an in-built view of who we are and what our place is. Seeing how you compare to cities like you can lead to, “Well, wait, we are doing worse than them. I did not realize. I knew some things were bad, but we are kind of okay.” I have actually seen when we have had this conversation and brought back some of the data—eye-opening moments where people think they’re doing okay and realize they aren’t. That helps get a broader range of folks on board and jump-starts that conversation.

Darius Bates: This benchmarking mindset creates urgency. If you were very far off from other peers, the types of questions you ask about what is going on and your level of urgency and what you ask them changes. What we have not really hit on in this conversation, but what I think is really important, is that the metrics matter because now we are saying, in the aspiration, we have a quantified from–to. You are starting here; you want to be here on your education outcomes. We know what those numbers are, and we are helping you think about the metrics that should move along to move those numbers. What that means is that when you start to actually implement interventions and initiatives to drive the change, you can look at those numbers and see if they’re moving. That is the accountability piece that many communities tell us they have struggled with and what they are trying to do differently going forward.

This benchmarking mindset creates urgency. If you were very far off from other peers, the types of questions you ask about what is going on and your level of urgency and what you ask them changes.

Darius Bates

Neal Stewart: We’ve talked a bit about the work, the impact you all have made, your experiences, and what was captured in the article. As we close out, we would love to learn a little bit more about what is keeping you inspired as you do this work within communities and seeing the impact it can have.

Darius Bates: I love that, Neal. I think for me, it has been seeing how these types of data and how this type of analysis have changed conversations in real time. It has empowered individuals in their communities to go again to their fellow community members and say, “We have to do something different.” It has inspired them. It has created a spark. We have seen it when we have these conversations with them and you see them having the realization, “Wow, this is a different view.” That is really exciting. It’s a lot of [the reason] why we wanted to write the article. Kind of coming full circle on what we started with, we’ve now talked about what’s actually in the article, but it’s because we wanted more folks who are looking to drive impact in the space, too, to know that this type of information is out there, and we’re trying to increase the knowledge sharing in the space. It is also why we are doing this Fireside Chat series and conversations as well, right? We are looking forward to talking with more folks about this. For folks who are watching this and want to learn a bit more, we will flash up our email address for our action 9 team. Reach out to us. We want to talk to you about what is going on in your community and how some of the views that we have talked about here today might help you shape a different conversation in your community. It might actually ignite a different transformation journey for your community as well.

Neal Stewart: Thank you all again for joining us for this conversation. We look forward to coming back to you with additional topics based on our place-focused work. In the meantime, we encourage you to stay tuned in to McKinsey’s 10 Actions site for additional conversations and content.

Up next, Darius will have a conversation with John Ahmann, president and CEO of Atlanta’s Westside Future Fund, on our next episode.

Once again, I am Neal Stewart. I am a Washington, DC-based consultant. I hope you enjoyed this conversation. We look forward to seeing you soon.

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