Why the Critical Race Theory Fight Matters in the Business World

Malia Lazu

In the past several weeks critical race theory, or CRT, has become the new “hot topic” in America’s continuing struggle to move forward productively on race. The same day that Texas passed a law declaring Juneteenth a holiday, Texas Gov. Gregg Abbott also signed a bill to ban teachers from teaching that slavery was a founding American ideal.  This law is part of a broader movement to restrict on how race history is taught in schools, with two states proposing bans on teaching CRT. 

The fact of the matter is the role of race in American history or contemporary society is not taught broadly in schools, with a recent study finding more than 96 percent of teachers said their schools did not require them to teach critical race theory.   

While CRT may seem like a minor issue for the business community, particularly in comparison to COVID-19, the country’s economic recovery, criminal justice reform and infrastructure, it is actually a cornerstone to achieving any form of equity in America. It is therefore critically important for the business community to understand.   

Unfortunately, many business leaders, like most Americans, may not know what CRT is, have never had any interaction with its scholarship and thus may never pick up an important tool for achieving racial reconciliation out of sheer ignorance.   

The Basics of Critical Race Theory 

So, what is CRT? It’s an education movement which takes a critical race lens to U.S. law. Its origins are found in the critical legal studies movement, which has been applied more broadly to study American history through a racial lens. Its founders contend that the country was created to protect the theft of land and slavery, with many of those systems in place to this day and influencing our criminal justice structure, housing policy and business regulations.   

Why is banning critical race theory a thing now? 2019 marked 400 years of enslaved people in America and the 1619 Project in the New York Times highlighted the effects of slavery in society, including its economics. This also aligned with the 100th anniversary of the Tulsa Massacre, a tragic and long virtually unknown massacre of 300 black people and burning down all of their businesses by white mobs in Tulsa, Oklahoma, along with the release of several historically-based blockbuster movies, like “Harriet.” This daylighting of challenging history has caused extreme discomfort for many people in the majority and the pushback was swift.   

But businesses interested in equity ignore critical race theory – the basis for books like the “Color of Money,” “Black Banks and the Racial Wealth Gap” – at their peril. We must engage with this leading scholarship on the persistence of the racial wealth gap through the history of black banks and wealth creation. Applying a racial lens to banking laws and history is key to understanding the systemic racism in banking and why efforts to close the gap fail.  

Key for Managing Workplaces 

CRT is the answer to the question “why we can’t get race right?” An honest review of American history will help Americans understand why we have the racial tension we have in this country. It will help us understand why police kill Black and Brown people so regularly, with little consequence and also help us dissect why the health and wealth gaps exist.  

Why is that important? A country created for westward expansion of Europeans, free labor and free natural resources may not be as stable or sustainable as we think. As we saw in recent elections, race is an easy issue for our foreign enemies to stoke unrest in Americans and an emerging recruiting tactic used by the forces of domestic extremism.  

Having an understanding of how race shapes norms helps any manager create a more empathetic work environment, one that can lubricate cultural changes towards equity and innovation. The chairman of the Joint Chiefs of Staff, Gen. Mark Milley recently summed up the importance of critical race theory smartly when he told members of Congress: “It’s important to be open-minded and be widely read…Our soldiers, they come from the American people so it’s important the leader now and in the future do understand it.”  

Growing diversity in America means a growing number of employees have a racial understanding of history. CRT helps managers understand the history that may otherwise be a barrier to innovative products, strong culture and customer retention.     

Malia Lazu is a lecturer in the Technological Innovation, Entrepreneurship and Strategic Management Group at the MIT Sloan School of Management, CEO of The Lazu Group and former Eastern Massachusetts regional president and chief experience and culture officer at Berkshire Bank.