How Diversity Can Drive Innovation

Reblogged from HBR online archive.


December 2013

How Diversity Can Drive Innovation
by Sylvia Ann Hewlett, Melinda Marshall, and Laura Sherbin
Most managers accept that employers benefit from a diverse workforce, but the notion can be hard to prove or quantify, especially when it comes to measuring how diversity affects a firm’s ability to innovate.

But new research provides compelling evidence that diversity unlocks innovation and drives market growth—a finding that should intensify efforts to ensure that executive ranks both embody and embrace the power of differences.

In this research, which rests on a nationally representative survey of 1,800 professionals, 40 case studies, and numerous focus groups and interviews, we scrutinized two kinds of diversity: inherent and acquired. Inherent diversity involves traits you are born with, such as gender, ethnicity, and sexual orientation. Acquired diversity involves traits you gain from experience: Working in another country can help you appreciate cultural differences, for example, while selling to female consumers can give you gender smarts. We refer to companies whose leaders exhibit at least three inherent and three acquired diversity traits as having two-dimensional diversity.

By correlating diversity in leadership with market outcomes as reported by respondents, we learned that companies with 2-D diversity out-innovate and out-perform others. Employees at these companies are 45% likelier to report that their firm’s market share grew over the previous year and 70% likelier to report that the firm captured a new market.

2-D diversity unlocks innovation by creating an environment where “outside the box” ideas are heard. When minorities form a critical mass and leaders value differences, all employees can find senior people to go to bat for compelling ideas and can persuade those in charge of budgets to deploy resources to develop those ideas.

Most respondents, however—78%—work at companies that lack 2-D diversity in leadership. Without diverse leadership, women are 20% less likely than straight white men to win endorsement for their ideas; people of color are 24% less likely; and LGBTs are 21% less likely. This costs their companies crucial market opportunities, because inherently diverse contributors understand the unmet needs in under-leveraged markets. We’ve found that when at least one member of a team has traits in common with the end user, the entire team better understands that user. A team with a member who shares a client’s ethnicity is 152% likelier than another team to understand that client.

Inherent diversity, however, is only half of the equation. Leaders also need acquired diversity to establish a culture in which all employees feel free to contribute ideas. Six behaviors, we have found, unlock innovation across the board: ensuring that everyone is heard; making it safe to propose novel ideas; giving team members decision-making authority; sharing credit for success; giving actionable feedback; and implementing feedback from the team. Leaders who give diverse voices equal airtime are nearly twice as likely as others to unleash value-driving insights, and employees in a “speak up” culture are 3.5 times as likely to contribute their full innovative potential.

These findings constitute a powerful new dimension of the business case for diversity.

Sylvia Ann Hewlett is the chair and CEO of the Center for Talent Innovation. Melinda Marshall is the center’s senior vice president and director of publications, and Laura Sherbin is an executive vice president and the director of research.

See the original article on the Harvard Business Review here

Diversity – not just a Business Case

Organisations need new and innovative ways to progress and create shareholder value and as the available workforce changes organisations have to transform at an increased pace, meaning managers must develop new skills to perform in these complex environments.

Diversity is a business imperative; it is a fundamental and necessary part of contemporary business.  Evidence exists that points to gender diversity as beneficial to organisations, but in order for this to really be of consequence, diversity needs to be more than just a program, it has to become part of the fibre of the organisations workings.  By ‘maximising’ diversity instead of just ‘managing it’ organisations will become more adaptable and flexible, (Ospina 1996).  Organisations must develop skills to manage complexity, adaptability and volatility, creatively, resilience and innovation.  To do this, organisations have to equip their managers to manage diversity and to shift it from a nice to have to a must have competency.

Diversity is about the management of complexity, building resilience within your organisation, embedding sustainable leadership thinking that enhances integration and cohesion.  By making new and diverse connections within your workplace, organisations harness and promote innovation and creativity.  Far from being a cost to bottom line profitability, diversity is a strategic imperative.  It is the new resource to increase revenue by using effective diversity programs to integrate the attributes of complexity and resilience, then leveraging them to create new environments for change and business transformation.

The question should no longer be, “Should we have a diversity program”, the question should be “how do you leverage difference and create new connections to differentiate yourself”.

Reframing ideas of diversity

Konrad (2003)[1] discusses the limitations of the business case by linking it to what she claims is an outdated “trait model of diversity”: the business case argument often ignores the destructive impact of stereotyping, prejudice, and institutional and interpersonal discrimination. Ospina (1996)[2] refers to “maximizing” diversity as opposed to “managing” diversity to acknowledge that diversity can actually push the organization’s frontier if effectively leveraged.

Reframing diversity and placing it squarely into strategy sees it working across difference as a core leadership task, getting diversity right by welcoming each person’s unique contributions, leading to a more adaptable and nimble organization in the face of today’s complex world.

Compliance to gender diversity legislation is a starting point but the real value comes when compliance converts to proactive action, realising the benefits of diversity.  The economic hit to the bottom line transcends diversity economics at an organisational level, stimulating economic growth at a macro level.

The Diversity Program Review Framework™[3]developed by Susanne Moore is a diagnostic tool that assesses and measures the effectiveness of a company’s diversity program by deploying the following  five organizational assessment dimensions; Program Management Capability, Cultural Integration and Acceptance, Organisational Vision and Strategy, Innovation through Diversity and Performance.

The Diversity Program Review Framework™ incorporates a widely accepted set of Global Diversity & Inclusion benchmarks previously developed in a US federally funded research project (O&R) by O’Mara and Richter (2011)[4].  The framework uses these benchmarks as a foundation, and builds on them to address a whole of organizational approach to Business Transformation.

The Diversity Program Review Framework™ allows organistions to;

  1. Baseline their diversity program against known benchmarks
  2. Assess the health and effectiveness of their diversity program against the five organisational dimensions
  3. Monitor the progress of the program along a capability maturity growth path
  4. Develop and Identify proactive interventions for improvement in areas where performance and innovation could be discovered or improved,
  5. Report against the programs progress and current country legislation

Find out if your organisation is on track to reap the benefits of diversity, book a complimentary, ‘coffee break session’ with Susanne today using the contact form, or call my partners, The Principal Structure for more details.

[1] Konrad, A. (2003). Defining the domain of work- place diversity scholarship. Group & Organization Management, 28(1), 4–17

[2] Ospina, S. 1996. Bringing Opportunity Back In: Organizational Inequality and the Study of Work Attitudes Journal of Administrative Theory and Praxis, 18:1, pp. 27-40.

[3] The “Diversity Program Review Framework™” (Moore, S 2012) incorporating the “Global Diversity and Inclusion Benchmarks: Standards for Organizations Around the World” (O’Mara, J, Richter, A 2011)

[4] “Global Diversity and Inclusion Benchmarks: Standards for Organizations Around the World” developed by O’Mara, J, Richter, A (2011),