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Why 2016 will be the year of diversity

Lab Confidential
2016 will be the year where we make sure that our organizations are able to thrive and to succeed in a world with radically and constantly altered requirements & possibilities - by introducing diverse workforces, cultures and business approaches.

From the depth of the Amazonas to the chilling plains of the Arctic, original peoples all over the globe have always held exogamy - mixing genes where ever possible - as key to tribe survival. It not only strengthens genetic material but secures friendly relations with other tribes and enriches language, culture and expands the valuable knowledge pool on tool practices, hunting methods or where to find food. To ensure stability and prosperity, successful peoples have developed systems to secure diversity.

Companies are terrible at survival.


Maybe we really have to adopt this kind of thinking to survive, as the cultural entities that organizations have become. Companies are terrible at survival. Of the original Fortune 500 list from 1917, one company remains, General Electric. We seek overexploitation of opportunity and monogamy - we focus our products, hire the same type of employees, stick to industries we know, stray very little from initial business models and partner with someone like ourselves. In the eyes of the evolutionary sound, this is a totally wrong approach, destined for self destruction. In order to thrive, we need to differentiate - deliberately, continually.

But diversity is not just a path to stability. The need to diversify is even more pressing in times of radical change, where life conditions shift and the need for innovative ways to stay alive and to thrive is even more pronounced. You could argue that the more conditions change, the more you need to diversify. It is a simple, proportional relation that is equally valid for peoples, cultures and companies.

The 21st century is already marked by constant change rather than simple transition from one state to the next. New technologies are transforming entire industries all the time and the way we live our lives at rapid pace; at the same time demographic changes modify our customer groups and markets constantly and radically. Transformational change has become so everyday that tech trend magazine Wired even has a penalty jar for everytime someone says “disruption”.

To set the pace in perspective, it seems we are faced with some of the greatest demographic changes in the history of mankind: 

  • The share of the world’s population that lives in the traditional Western world (Europe, the United States, Canada) has dropped from 33% in 1913 to less than 17% in 2011. In 2050 that number is expected to be less than 12%. (Ross, 2011)

  • The proportion of the world that lives in urban areas and is more likely to interact cross-culturally is predicted to rise from less than 30% in 1950 to more than 70% in 2050. (Ross, 2011)

  • By 2020, the Internet will have nearly 5 billion users, the same as the total world population in 1987 (National Science Foundation, 2010).

Overall, the world population is becoming less Westernized, more urbanized and more connected. Or you could say, much more diverse, much more able to perform radical shifts with unpredictable relations across cultures and geographical boundaries.

To stay relevant as organizations, we continually need to adapt to these changing conditions and reflect them appropriately in our actions. And we can do so by continually pursuing new competences and resources, applying new business models, providing new products, using new work methods, new channels and targeting new market segments. In 2016, diversity will therefore be the new "must do" strategic imperative. We have learned the value of diversity from asset management, if not from anthropology, now we need to apply the best way to make the most of a volatile financial market to the best way to tackle a volatile world.

Diverse workforce

Gender-diverse companies are 15% more likely to outperform their peers and ethnically-diverse companies are 35% more likely to do the same.

How can we diversify intelligently? And what can we gain from it? 

Both research and practice from the last 3 decades indicate that the true value of diversity only appears when deliberately cultivated - through a mixed demographic composition of talent, a truly inclusive culture and a versatile business approach.

1. A mixed demographic composition of talent

Diversity is a top-to-bottom business strategy - not just an HR program. Still, the message from the latest research is clear:  sustainable business performance today depends on our ability to attract and engage a highly diverse workforce.

Failure to do this will not only impact our employment brand but also our company's innovation. It will take a high level of focus and systemic investments in various areas to make this happen - yet it is crucial, according to Google CEO Sundar Pichai: “I firmly believe that whether you’re building a company or leading a country, a diverse mix of voices and backgrounds and experiences leads to better discussions, better decisions, and better outcomes for everyone.”

And research proves him right - recent McKinsey studies have found that gender-diverse companies are 15% more likely to outperform their peers and ethnically-diverse companies are 35% more likely to do the same.

Inclusive culture

Inclusive culture is about fully integrating very different people into the structure of the organization.

2. A culture of inclusion

As crucial as the mixed demographic composition of our talent is, diversity is not achieved by just introducing quota - or by “throwing” as many people with different backgrounds as possible into one office, expecting them to just “work it out”.

A truly inclusive culture is about fully integrating very different people into the structure of the organization. This means responding to various expectations and needs that come from gender, language, ethnicity, religion, age or other differences. This type of culture can be lived through organizational practices in which all employees can thrive and bring out their full potential - for example transparent standards for career development, consistent communication structures and inclusive decision making, just to name a few.

Building a strong inclusive culture takes effort, executive support, and will touch almost everything we do. Companies, such as 3M, ISS, Novartis and other diversity leaders have been investing in these strategies for years. Also, these companies are outperforming  many of their peers. Why? Because people perform best when they feel valued, empowered, and respected by their peers. Neurological research by David Rock and others shows that our most productive, innovative, and collaborative times at work happen when we feel like we are a part of the team. When we feel included and respected, our bodies create hormones and healthy energy that raises our performance at work.

Research by Cedric Herring at the University of Chicago proved that "diversity promotes superior outcomes over homogeneity because progress and innovation depends less on lone thinkers with high intelligence than on diverse groups working together and capitalizing on their individuality." His statistical research found that across hundreds of companies, diverse teams drive 6% greater revenue, 15% more customer wins, and create significantly higher market share. These teams work better together, innovate more, and come up with superior customer solutions. Deloitte Australia research shows that inclusive teams outperform their peers by 80% in team-based assessments.

Versatile business approach

Being diverse means utilizing all the cards at hand.

3. A versatile business approach

While it was important to focus on one type of product/service/customer group and business model throughout the industrial age, to achieve a perfect product-market fit, the situation today is very different. Now we have all the tools & technologies to provide diverse product portfolios and services, reach different customer groups and operate on different business models at once. Not least, we can spread our risks.

In fact, many of the world’s most successful companies have a highly diverse business approach. Take 3M as an example: after more than a century in business, 3M is still at it, at age 114 - and successful. The conglomerate is introducing new products as if it were a startup - continuously innovative -  selling more than 55.000 different products today. How do they do it? From the chief executive down, the whole company is committed to diversity, through differentiation and various avenues of innovation. The company has leading know-how in more than 45 diverse technologies. That allows researchers to take an idea from one field and apply it to another. For example, 3M scientists have used a technology behind layered plastic lenses to make more durable abrasives, more reflective highway signs, and golf gloves that allow you to get a tighter grip without squeezing as hard. Highly diverse applications of the same technology.

Diversity has kept 3M relevant for more than one hundred years - in a time where the average life expectancy of other companies has dropped from 67 years in 1920 to 15 years in 2015, according to the Yale School of Management. Moreover, the company was able to avoid issues many other (less diverse) companies have greatly failed at. Low top and bottom lines, low creativity & innovation levels, non-thriving workforce and missing connection to the market are just a few of them.

How to get started

There is an even stronger and more widely acknowledged notion than the notion that we must disrupt ourselves to stay relevant - and that is the importance of differentiation. But to differ, we must have a strategy for embracing diversity. More than anything, it is exactly here that successful organizations stand out - they embrace diversity.

Some of the key actions we can learn from highly successful companies, to engage with diversity in our own corporation, are the following: 

  1. Seeking an understanding for the organization’s current diversity status

  2. Creating a top level (CEO/COO/CHRO) diversity focus and strategy

  3. Integrating diversity strategies in all people, culture and product related business areas (recruitment, product development, sales etc.)

  4. Creating diversity metrics, and holding leaders accountable for results

  5. Introducing behavioural standards & training for people at all levels on topics like implicit associations, unconscious bias etc.

  6. Creating an internal and externally visible scorecard/index to measure progress in all areas

As these actions indicate, we need to look at diversity at large to get the most out of it. It is less of a “temporary program” or a “project” tied to one single department within the organization; it is more of a culture and a strategy that together affect all parts, all people and all activities within our company. And once we “get it right” - one surprisingly small step could be to not disallow diversity - we benefit hugely. We become more resistant to outside disruption, we increase our innovative & economic potential and boost our employee & customer satisfaction.

So may 2016 be the year of diversity for you. May you “get it right”. And may you therefore stay relevant.

Medlemsbriefing om diversity i februar 2016

I februar afholder Lisa en medlemsbriefing om diversity - og hvorfor diversitet er den nye strategiske “must do", for at forblive relevant. Vi har lært værdien af diversitet fra formueforvaltning, nu er vi nødt til at oversætte den bedste måde at tackle et skiftende finansiel marked til den bedste måde at tackle en skiftende verden. Det bliver en spændende og praksis-orienteret tour gennem emnet der i høj grad kommer til at få spalteplads i 2016. 

Briefingen afholdes 23. & 24. februar, fra 14.00 - 16.00, i hhv. Aarhus og København.

Som medlem kan du tilmelde dig briefingen på dette link.

Er du ikke medlem, kan du oprette et prøvemedlemskab hér, der inkluderer en gratis deltagelse.