New research published in the Harvard Business Review details how diversity can help organizations innovate more effectively and increase market growth. These findings should ensure that the executive suites embody and embrace the benefits of diversity.
The research, which included a nationally representative survey of 1,800 professionals, 40 case studies along with numerous focus groups and interviews, scrutinized 2 types of diversity: inherent and acquired. Inherent diversity involves traits that an individual is born with, such as gender, ethnicity, and sexual orientation. Acquired diversity involves traits that are gained from their experience and journey: work experience in another country can help you appreciate and learn about cultural differences; military experience gives veterans a unique view of the world; and parenting an appreciation for work/family balance . The HBR research refers to companies whose leaders exhibit at least three inherent and three acquired diversity traits as having two-dimensional diversity.
One can look at the experience Mattel has using an ERG to assist in the innovation of a new doll. According to Forbes magazine, two years ago company executives decided to launch a new line of dolls that would be targeted to African American girls. Mattel executives wanted to ensure that the introduction of the new dolls was culturally sensitive. Senior management reached out to the Mattel African-American Employee Resource Group to advise and guide Mattel’s marketing team through the launch of the doll. As a result of this collaboration, the product is one of the company’s best selling, minority-focused brands.
By coupling diversity in leadership with market outcomes, respondents said that companies with 2-D diversity out-innovate and outperform others. It was reported that these organizations are 45% likelier to report that their firm’s market share grew over the previous year, and 70% likelier to report that the organization captured a new market.
Company’s that employ 2-D diversity found that it unlocks innovation by creating an environment where “outside the box” ideas are heard. When minorities form a cohesive group and leaders are open to hearing different voices, all employees can find senior executives ready to sponsor a compelling idea and seek out funding from the powers that be.
The reality is that 78% of respondents said their company lacks 2D diversity in leadership. Without this type of diversity, women are 20% less likely than men to have their ideas backed; people of color and LGBT’s employees were 24% and 21% respectively less likely to have an idea backed. The absence of 2D diversity thinking creates a tremendous opportunity cost to an organization that causes their company crucial market openings as inherently diverse contributors understand the unmet needs in under-leveraged markets. When at least one member of a team has traits in common with the end user the entire team better understands that user. One key component of the research found when a team member shares a client’s ethnicity, it is 152% likelier than another team to understand that client.
Inherent diversity is only half of the solution. Leaders also have to have acquired diversity in order to create a culture in which all employees feel free to contribute ideas. HBR found six behaviors that unlock innovation: ensuring everyone is heard, creating the conditions 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 encourage giving diverse voices equal time are nearly twice as likely as others to “unleash value-driving insights”. Additionally, employees who are involved in a “speak up” culture are 3.5 times as likely to contribute their full innovative potential.
These findings not only demonstrate the benefits of diversity in the workplace, but also go a long way to making a business case for diversity.