Embracing diversity and internationalization as drivers for growth and innovation

There is strong rhetoric around diversity, inclusion, and internationalization at the moment – and for good reason. But who would think that these topics would help leaders to achieve their most pressing goals? From my perspective, there are a few key findings that underline the impact that a diverse and international culture has on a company’s future innovation performance.

Making diversity a top priority will enable your company and workforce to grow. In 2018, Deloitte wrote an article called ‘The diversity and inclusion revolution: Eight powerful truths’, and it stated that diversity of thinking enhances innovation by 20%. Their statistics came from a study conducted by the Australian Institute of Company Directors (‘How diverse teams create breakthrough ideas and make smarter decisions’, 2015). They interviewed 50 global organizations and also found that diverse workforces are 30% more likely to spot mistakes.

But there are 3 more significant reasons why building a diverse and international team is a prerequisite for success in today’s world:

1. Embracing diversity and internationalization are fundamental for future business growth.
2. Diversity creates diverse perspectives. Building a team of top diverse and international talent will give you a competitive edge.
3. Increasing internationalization efforts will affect the innovation performance of a company.

1.???Embracing diversity and internationalization are fundamental for future business growth.?

Could diversity and internationalization prove to be the elixir to growth and innovation in such difficult times?

Well, according to Rocío Lorenzo, Managing Director, and Senior Partner at BCG, the answer is yes! Lorenzo and her team surveyed 171 large European companies through a study conducted with the Technical University of Munich. The findings from this study were initially presented in their 2017 report, ‘The Mix That Matters – Innovation Through Diversity’, and the core question posed to their focus group was: Are diverse organizations more innovative?

To measure the responses accurately, the term innovation revenue was introduced. Lorenzo defines innovation revenue as "the share of revenue companies make from new products and services over the last three years”. This means the study focused on the question of whether these ideas translate into products and services that really make the company more successful today and tomorrow.

What they actually found out is that when companies take their diversity quota seriously, it can speed up growth and innovation. According to Lorenzo’s research, for gender diversity to have an impact on the innovation revenue in an organization, companies need to have more than 20% of women in leadership positions. So, considering this, corporates need to focus on building critical mass in order to move the needle.

2.???Do you want to have a competitive edge?

I am a complete believer that in today’s world, having a team made up of top diverse talent will give you a competitive edge. Empowering a diverse group of people around us means we can be influenced by wider angles and widening the group equals extending the ideas you can get for a specific problem.

But even more importantly, embracing diverse perspectives of course can also create a healthy sense of conflict in an organization, which eventually leads to ground-breaking thinking, which leads to growth and innovation if guided in the right direction.

A McKinsey report (‘Diversity Matters’, 2018) found that companies in the top quartile for executive team gender diversity were 21% more likely to experience above-average profitability than companies in the fourth quartile. The study also revealed, “the companies in the top quartile for racial/ethnic diversity were 35% more likely to have financial returns above their national industry median”. 366 companies were interviewed for this study, and it statistically indicates that companies that commit to diverse leadership are more successful.?

3.???Increasing internationalization efforts will directly affect the innovation performance of a company.

Is there a connection between internationalization and diversity on digitization and innovation? Mario Kafouros, Professor of International Business & Innovation at the University of Manchester, and Peter Buckley, Professor of International Business at the University of Leeds, conducted a study on the role of internationalization in explaining innovation performance. And what was the key result? It was that not all firms can reap rewards from innovation. Only those companies that have a sufficient degree of internationalization will see an effect on their firm’s overall innovation performance. Therefore, hiring talent from all corners of the globe helps to increase your company’s innovation potential and is the answer that’s needed to steer your company forward in a healthy future direction.

Here at Mercedes-Benz, we have taken the next steps in building a truly international and diverse team. ?In 2015, we established a sub-division called Mercedes-Benz.io to fully focus on our digital products and to consequently close the gap between online and offline channels by offering a seamless luxury digital customer experience. Since its inception, we have built an international tribe of 386 MB.ioneers, 102 of them are women. Our team is highly diverse and dispersed, coming from 48 different nationalities. Within the next years, Mercedes-Benz.io will strengthen its digital product teams in the heart of an emerging digital nation – Lisbon, Portugal. I am really looking forward to seeing even more results from this global hub as others like MBRDI in India – have already been proven.

You may ask, how do I personally contribute to a diverse and international working environment within Mercedes-Benz? Well, I am responsible for approximately 2,000 people located across the globe. Our team comes from many different backgrounds, they speak many different languages, are of different ages, genders, and religions. In my division, we have 25% of women in management positions and in general, more than 34% of people are women. We are on a continuous journey to create an environment to support our diverse and globally connected team. We place a special focus on promoting diversity in all personnel policy and development processes and diversity management has been part of our corporate strategy since 2005. Embracing diversity and internationalization has been a huge driver of innovation within Mercedes-Benz IT, and I cannot wait to see where we are in years to come.

We have seen that changing the face of leadership will make companies more innovative. It is proven, and there is evidence. Let this be the solution for developing our businesses to be more attractive, innovative, and prepared for future growth.