Adapt, change or die, says the famous business motto.
These findings in this report by the Center of Talent and Innovation show that innovation draws on diversity in two ways: employees with inherent diversity best understand markets and end-users that companies today are most keen to reach; and leaders with acquired diversity are best equipped to unlock the insights of these employees. At companies that harness both inherent diversity in their workforce and acquired diversity in leadership (“two-dimensional” diversity), employees are 75 percent more likely to have had a marketable idea implemented than employees at companies that fail to harness these drivers.
“What drives serial innovation? CTI’s ground-breaking research reveals the engine to be a diverse workforce that’s managed by leaders who cherish difference, embrace disruption, and foster a speak-up culture. Inclusive leader behaviors effectively “unlock” the innovative potential of an inherently diverse workforce, enabling companies to increase their share of existing markets and lever open brand new ones. By encouraging a proliferation of perspectives, leaders who foster a speak-up culture also enable companies to realize greater efficiencies and trim costs—another way that innovation drives bottom-line value.
Leaders have long recognized that an inherently diverse workforce (inclusive of women, people of color, gay individuals) confers a competitive edge in terms of selling products or services to diverse end users—what’s known as “matching the market.” Our research shows, however, that an inherently diverse workforce can be a potent source of innovation, as diverse individuals are better attuned to the unmet needs of consumers or clients
like themselves. Indeed, their insight is critical to identifying and addressing new market opportunities. We find that when teams have one or more members who represent the gender, ethnicity, culture, generation, or
sexual orientation of the team’s target end user, the entire team is far more likely (as much as 158% more likely) to understand that target, increasing their likelihood of innovating effectively for that end user.
Six inclusive behaviors, we find, are highly correlated with a “speak-up” culture, or an organizational environment where everyone feels free to volunteer opinions, suggest unorthodox approaches, or propose solutions that fly in the face of established practice. Leaders who exhibit at least three of these six behaviors unlock innovative capacity by unlocking the full spectrum of perspectives, opinions, and toolkits that diverse individuals bring to problem-solving. While critical at the team level, such leaders are especially transformative at the top, because they’re the ones who determine organizational culture by socializing their behaviors. Brilliant individuals and high-performing teams cannot deliver in a culture where channels for experimentation don’t exist, failure is penalized, and the loudest voice in the room is that of the leader.
Indeed, our research shows that when leadership lacks innate or acquired diversity, or fails to foster a speak-up culture, fewer ideas with market potential make it to market. Ideas from women, people of color, LGBTs, and Gen-Ys are less likely to win the endorsement they need to go forward because 56% of leaders don’t value ideas they don’t personally see a need for—a veritable chokehold when an organization’s leaders are predominantly Caucasian, male, and heterosexual, and come from similar educational and socioeconomic backgrounds. In short, the data strongly suggest that homogeneity stifles innovation. Fully 78% of our survey sample work for such a company.
Companies that harness both innate diversity in their workforce and acquired diversity in leadership are measurably more innovative than companies that fail to harness these drivers. Employees at companies with 2D diversity are more likely than employees at non-diverse companies to take risks, challenge the status quo, and embrace a diverse array of inputs. They’re also 75% more likely (35% vs. 20%) to see their ideas move through the pipeline and make it to the marketplace.
Most dramatically, our findings demonstrate a robust correlation between highly innovative, diverse companies and market growth. Diversity pays a handsome dividend: employees at publicly traded companies with 2D diversity are 70% more likely (46% vs. 27%) than employees at non-diverse publicly traded companies to report that their firm captured a new market in the past 12 months, and 45% more likely (48% vs. 33%) to report that their firm improved market share in that same time-frame.
In the final analysis, our research shows, companies with multicultural workforces have the means at handto grow and sustain innovation. The secret isn’t a surfeit of creativity, although creativity helps. It isn’t a lone genius, although genius never hurts. Rather, innovative capacity resides in an inherently diverse workforce where leaders prize difference, value every voice, and manage rather than suppress disruption. If innovation is
the Holy Grail, then diversity should be a company’s unrelenting quest.”