Innovation thrives with diversity

Innovation is underpinned by team diversity and inclusive workplace practices. That's the conclusion of a great deal of research across the fields of leadership, business psychology, and human resources in recent years.

The variety of perspectives and thinking approaches that diverse teams bring to decision-making helps to reduce biases such as groupthink - one of the biggest barriers to innovation.

The theory is being translated into practice in many Australian and New Zealand companies, as more and more leaders see the value of diversity of thinking and background for innovation.

For example, the CEO of an industry fund recently contacted us to explore how bias might be getting in the way of effective decision-making and innovation among his team. His team was gender balanced and culturally diverse, and he appreciated the different perspectives that brought.

But he wanted to go further, to identify their preferred approaches so they could consciously bring different perspectives to decision-making as they launched new products and expanded their market.

It reminds us of a recent quote from Apple's CEO, Tim Cook: 'Our best work comes from the diversity of ideas and people.  We believe in a modern definition of diversity — the big D — which supports creative friction and its contribution to making better products.'

For companies wanting to understand more about the links between innovation and diversity (both cognitive and demographic), we've found the following studies particularly useful. You can click on the links to see the full articles, or contact us for more information.

 

  • In a strategy execution exercise, researchers found teams with greater cognitive diversity perform faster. Diversity in knowledge processing (how people create knowledge in the face of problems) and perspective (how they deploy their own expertise versus orchestrating the ideas and expertise of others) were highly correlated with team success. (Alison Reynolds and David Lewis, 'Teams solve problems faster when they're more cognitively diverse', Harvard Business Review, 2017.

 

  • Employees who felt more included were more likely to report innovating on the job i.e. identifying opportunities for new products and processes and trying out new ideas and approaches to problems (Catalyst: ‘Inclusive Leadership the View from 6 Countries’, 2014).

 

  • A study in the United States of the performance of 1,500 companies over 15 years found that more women in top management improved the performance of firms that were heavily focused on innovation (Catalyst: ‘Why Diversity Matters’, 2013).

 

  • “The ideas and solutions that an intellectually diverse team generates will be richer and more valuable due to the wide variety of perspectives that inform them. Diversity of thought and perspective can protect your team from groupthink and can spark creative abrasion, a process in which potential solutions are generated, explored, and altered through debate and discourse” (Harvard Business Review: ‘Measure Your Team’s Intellectual Diversity’, 21 May 2015).

 

  • When measuring how diversity affects a firm’s ability to innovate, researchers reported significant benefits from both inherent diversity (such as gender, culture) and acquired diversity (traits gained from experience). They referred to companies whose leaders exhibit at least three inherent and three acquired diversity traits as having two-dimensional diversity. Their conclusion: companies with 2-D diversity out-innovate and out-perform others.

'Employees at two-dimensional 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.' (Sylvia Ann Hewlett et all, ‘How diversity can drive innovation’, Harvard Business Review, December 2013 - How Diversity Drives Innovation).

Innovation