Google redefined access to knowledge. Facebook redefined human connectivity. Spotify redefined the music business. Each of these giants of the digital age are shaping the future of industries, of economics, of life on earth. But whether they continue to remain top players is not entirely a given. The same is true for other large companies. The tide of innovation that organisations like these unleashed on the global economy can undoubtedly be their undoing if they fail to recognise and act on one very important fact: diversity drives sustained growth.
The evidence for this is clear. Diverse teams outperform non-diverse teams. I find this consistently in the work that my firm, the Medici Group, has done with thousands of teams at companies around the world at the intersection of innovation and diversity. Our experience is also supported by research: a BCG study (The Mix That Matters, 2017) found that firms with women on their board of directors have higher returns on equity and higher market-to-book value than firms without women. Another study, published in Financial Management, found that companies who hire across the spectrum of race, sexuality and gender produce more patents and perform better than non-diverse companies during economic downturns.
Many leaders associate innovation with experts, technologists and R&D professionals whose job it is to grow the company. But the truth is that growth and innovation are about people. It’s about the game-changing ideas they are able to create by coming together as diverse teams. In this piece, I provide insight as to why diversity is the new engine of long-term growth.
Ideas aren’t created out of thin air. They’re created by people—by teams of people. And when these teams are diverse along many dimensions—culture, ethnicity, gender, sexuality, age as well as experience, education, expertise—they are equipped to combine their influences to come up with more unusual, more unlikely ideas that have a higher potential for driving growth.
Consider the following example: Some years ago, there was a hospital in Bristol, England that was having difficulty transferring patients from the surgical unit to the intensive care unit without making errors. There was confusion, lack of collaboration, and a handful of fatal errors. The obvious thing to do to fix these issues would have been to look at what experts at other hospitals were doing. But they didn’t. They teamed up with McLaren Racing—the renowned Formula One team. They applied the techniques of a Formula One pit stop crew to their patient transfer model. And what happened?Their error rates declined dramatically. Instead of turning to the “experts,” this hospital sought out a perspective that seemingly had nothing to do with healthcare. The results speak for themselves.
Intersections like these are extremely powerful, and illustrate a few key things: First, we can borrow concepts from other fields to create truly innovative ideas. Secondly, sometimes experts aren’t always the ones with the best answers. Thirdly, all new ideas are combinations of existing ideas. Collectively, these points highlight the core idea behind the Medici Effect. Think back to how the Italian Medici family brought sculptors, architects, philosophers, and inventors from all over Europe to Florence. Together these minds unleashed an explosion of creative ideas—one of the most creative eras in Europe’s history: the Renaissance.
You can ignite a modern-day Renaissance in your own organisation. But in order to do so, you must select which ideas to explore further, which brings me to my second point.
It’s one thing to create many ideas. But once you’ve done this, you must decide which ones to test and put more resources behind. When it comes to selecting ideas to try, diverse and inclusive teams make better decisions. The data collected by Cloverpop on its decision management platform, used by hundreds of companies, found that the more diverse the team (by gender, geography and age) the better the decision. James Surowiecki’s book The Wisdom of Crowds also supports this idea. What the Medici Group has seen consistently in all our client engagements is that the more dimensions of diversity a team adds, the higher the chance they have at selecting better ideas, which directly translates into growth.
This is because diversity of thought stretches a team in ways that can be uncomfortable, but effective. It raises their ambition level on what they believe is feasible, and redefines the parameters that they otherwise operate within when they’re working in homogenous teams. Diversity in decision-making can also prevent teams from making bad decisions—ones that may alienate customers, harm the brand, or impede growth.
Even though diverse and inclusive teams make better decisions, there still remains the most crucial step of all: actually bringing the ideas that they decide on to life.
Diverse teams have far more pathways to execute an idea, which enables them to grow the business faster and more cost-effectively. Diverse and inclusive teams are able to leverage the whole organisation’s resources. They can manoeuvre the enterprise on a tight budget, and tap into team members’ internal and external networks—networks some team members may not otherwise have explored on their own. Even more, if the network that the team is tapping into is also diverse, their surface area inside of the organization expands exponentially. This type of expansive, serendipitous collaboration is what drives fast action.
One Disney World park achieved this type of fast action after working with the Medici Group for over a year to break down silos internally and externally with other Disney parks and divisions. They were able to reduce the time it takes to execute an idea from 40 weeks to 6 weeks, which is a game-changing improvement at any company in any industry.
Diversity and inclusion are paramount to driving a culture of innovation. It is essential for companies to understand this if they want to spur growth. Now, what does this mean for you right now?
I’ll leave you with three things you can do immediately to set your company up for increased growth.
The world is changing rapidly, it’s true, and the need for companies to focus on growth has never been greater. But my aim with this piece isn’t to alarm. It’s actually to inspire. Diversity is an abundant resource, able to be tapped into by any company, anywhere. All you have to do is make it a priority.
Men and women, old and young, people of every sexual orientation and ethnicity – everyone must have the same opportunities to unlock their potential. And in order to be successful, a company needs their perspectives, experience, and knowledge. After all, it must be able to react flexibly to a constantly changing world. It must be open: to a wide range of ideas, new ways of working, different business models – to diversity.
We position ourselves clearly for diversity, equality and appreciation of the strengths and weaknesses of each individual, regardless of skin colour, origin, religion, handicap or sexual orientation. Diversity is a value that goes without saying for us as a company!
More about diversity in the Otto Group >>
In 2019, the Otto Group will be an official partner and proud supporter of Hamburg Pride for the third time and will once again participate with its own truck in the demonstration and parade for Christopher Street Day on 3 August 2019 in Hamburg.
This year again, the Otto Group and its Hamburg-based group companies and foundations want to set an example for acceptance and diversity under the motto "#seiwerdubist" (be who you are).