Diversity powers innovation – and some serious competitive advantage

Samantha Almeida and Priyani de Silva-Currie of Calibre share their insights on the effects of innovation on an organisation’s success and growth.

Success and growth are dependent on an organisation’s ability to continually innovate.

But if you believe that you have to be smarter or have clever ideas to innovate, think again. While these attributes are helpful, the most powerful, but least understood, force for innovation is diversity. It’s truly the best possible competitive advantage any organisation can have and one of the easiest to implement.

The term diversity usually calls to mind differences in race, gender, ethnicity, physical capabilities, sexual-orientation, social and political differences. At first glance, these differences appear to have little to do with innovation. Yet the key to innovation, in economic terms, resides inside the heads of an organisation’s people, and the more diverse those minds are, the better.

Constructing organisational and institutional structures that encourage innovative activity has been one of the most vexing problems for businesses and countries over the past half century. The positive news is that latest research from McKinsey & Company finds that companies who proactively foster gender or racial and ethnic diversity are more likely to financially outperform their national industry medians. On the flip side, organisations that do not support diversity find themselves lagging financially.

Contrary to the belief that innovation requires smarter people, the reality is that innovation requires the ability to think differently. Diversity therefore trumps ability as the greatest force in innovation and achieving the best possible competitive advantage. Best of all, it’s one of the easiest investments an organisation can make.

In an increasingly globalised world, organisations with greater levels of diversity are performing better than their less diverse competitors. Not only do they achieve better financial results, they are able to think outside the box, better understand their clients, employees and unmet needs in underleveraged markets, make the most of market opportunities, have a broad strategic perspective, plus attract and retain the top talent.

Diversity is also an essential part of a healthy organisational culture. While many organisations have made efforts to increase diversity in their workplaces, many barriers still exist that prevent effective diversity within workplaces.

The key to addressing this is to ensure authentic leadership. This sees genuine commitment to diversity start at the top table and flow down throughout the organisation. The result of genuine acceptance, tolerance and communication strategies that embrace different perspectives is increased competitive advantage and improved innovation.

But inherent diversity will only achieve so much. Organisations also need acquired diversity, a genuine appreciation of difference, and an established culture in which all employees feel free to contribute ideas.

Inherent diversity is the traits one is born with, for example ethnicity and gender. On the other hand acquired diversity is the traits one gains from experience, such as learning to appreciate cultural difference when working in another country

A diverse and smart person is generally someone who has lots of interesting experiences, diverse perspectives and many effective heuristics. This person performs well, and often innovates, because of the many tools he or she possesses.

A group of smart and diverse people can consider a wide range of ideas, and bring to the table new perspectives and cognitive sources of information based on the way these people think. Wisdom of the crowd theory naturally leads to creative betterment and innovation.

Few New Zealand organisations can claim to truly have a diverse workforce. Over half (58 per cent) of New Zealand employees want to see more diversity in the workplace, according to a survey of both employers and employees by Hays. It became apparent that when people think of diversity, they often focus on gender diversity alone. But a true diverse workforce is one inclusive of people of various genders, ages, cultural backgrounds and people with physical and mental disabilities.

While most organisations understand and embrace the notion of diversity, the difficulty is in making it work. Many organisations find their diversity progress has stalled or are unsure of what actions to take to increase diversity within the organisation. Below are 10 tips to help organisations develop and leverage their diversity programs.

1. Prior to setting diversity targets and creating an action plan, an important first step is to unpick the workforce’s metrics to understand the current level of workplace diversity (or lack of it).

2. Include everyone in the definition of diversity, not just women, minorities and people from other countries.

3. Raise awareness of unconscious bias help recruiters and managers make better decisions when choosing who to hire and promote.

4. Ensure that the leadership team is a visible voice for diversity

5. Make sure diversity is a business-wide initiative. One way this can be achieved is by creating a diversity committee with employees across multiple levels and functions of the organisation.

6. Make flexible work arrangements available for all.
7. Ensure recruitment practices attract a diverse pool of candidates.

8. Give new recruits a reason to stay focus on getting to know their personal identity, encourage them to play to their strengths and share their ideas.

9. Encourage networking through professional organisations to enable staff to expand their perspectives and knowledge, foster collaboration and connect with potential candidates.

10. Maximise the benefits of diversity of thought and drive innovation by creating a culture where all employees feel free to contribute ideas.

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