Diversity is a Killer Business Strategy

There isn’t a private or public company that doesn’t have diversity and inclusion somewhere on its agenda in 2020. This represents real progress. Five years ago, particularly in tech, a strong D&I agenda with teeth was the exception rather than the rule. But, even while the agenda has changed, an objective analysis shows that actual results have been much slower to materialize. Equally troubling, most companies measure and speak about their progress purely in employee numbers, not business outcomes.

There are complex issues that contribute to these tepid results, among them the fact that not all companies are crystal clear about why they are pursuing diversity or what success really looks like. There could be many reasons to pursue a diversity agenda, including avoiding negative publicity, or keeping up with peers. I have had several private conversations with leaders of major companies who worry that a forced march towards diversity might dilute the sharp edge of talent competitiveness needed to win in the marketplace. Their private concern is that an accelerated hiring strategy might result in hiring less-than-best candidates.

It’s clear they're missing the big picture: a diverse and equitable workforce isn’t just the right thing to do. It’s also a killer business strategy.

It’s clear some companies and leaders miss the big picture when it comes to diversity.

Recent studies quantitatively back this up. But, sometimes, culture eats data for breakfast and change can be a long, slow process. Successful companies want to keep doing what they're doing, and something as critical as the hiring, retention and development of talent is a main artery of their corporate process. If the motivation to pursue diversity is purely a top-down, “just because” mandate, or appears to employees to be at odds with other business goals, results are slow to follow. 

My own experience tells me the link is simple, powerful and intuitive. Leaders who help an organization recognize that diversity enables business goals change their culture faster and achieve better business results. The connection should be straightforward:

• The War for Talent. Diversity is a powerful weapon in the war for talent. Rather than diluting hiring standards, in practice it raises the bar further. Why? Companies, especially in tech, don’t have perfect access to the global talent pool. Every day is a fight to attract and retain the best people available. A company with a diverse workforce and equitable workplace simply attracts a wider talent pool and has access to better people. Inclusion is a flywheel. When candidates believe they will be welcomed by a positive environment and know they can bring their best and most authentic selves to work, they will not only be attracted to accept an offer, but they will also become avid spokespeople for that company. Once outstanding diverse candidates join, more will consider. No outstanding candidate wants to be alone, wants to be treated differently, or wants to be thought of as anything but the most capable for the role. An effective diversity agenda can open the talent pool, bring the best talent forward from every part of the market, and make companies better. This is a definable competitive advantage.
• Better Understanding of Customers and Markets. Very few companies have customers who all act and think the same. They’re heterogeneous and have preferences and proclivities that reflect who they are and where they come from. It is a very common trap for a business to impose its view of the world on its customers. The more diverse the experiences of the team making customer decisions, the better the chances are that these differences will be understood and incorporated. This is all about growth and customer intimacy. In the early days of ecommerce, men dominated online shopping. Commodity goods like electronics and auto parts were the majority categories and search was the only way products were surfaced. It took women leaders, and women-led companies like Parachute, Glossier, Rent the Runway, Minted and The RealReal to shake up the consumer model, and to supplement “seek and destroy” shopping with “browse and discover.” This model is now an enormous part of the global ecommerce market. Companies like Airbnb and Cisco are global platforms with local businesses and have used the multiculturalism of their workforces to understand local markets, opening up entirely new growth opportunities. Having leaders with different perspectives leads to better decisions and better outcomes.
• Resilience. Leading teams and running businesses is not easy. It requires discipline, toughness and staying power. Crises emerge from nowhere, and how leaders manage issues and problems often determines whether they can sustain success. I have found that diverse teams are better able to weather storms. Stylistic differences and perspectives can create stronger bonds, and more shock absorbers when the bumps inevitably come. Teams that are monolithic miss problems and respond similarly, when oftentimes a different approach is needed. Strength comes in many forms, and there is strength in difference.

Great companies and great leaders understand their roles in the world. They embrace stakeholder capitalism and they use it to drive great results. Diversity and inclusion in the workforce and workplace, done correctly, is a powerful lever that can enable businesses to thrive.