How diversity makes teams more innovative | Rocío Lorenzo | TED

Fifteen years ago, I thought that the diversity stuff
was not something I had to worry about. It was something an older
generation had to fight for. In my university,
we were 50-50, male-female, and we women often had better grades. So while not everything was perfect, diversity and leadership decisions was something that would happen
naturally over time, right? Well, not quite. While moving up the ladder
working as a management consultant across Europe and the US, I started to realize how often
I was the only woman in the room and how homogenous leadership still is. Many leaders I met saw diversity as something to comply with
out of political correctness, or, best case, the right thing to do, but not as a business priority. They just did not have a reason to believe that diversity would help them achieve
their most immediate, pressing goals: hitting the numbers,
delivering the new product, the real goals they are measured by.

My personal experience
working with diverse teams had been that while they require
a little bit more effort at the beginning, they did bring fresher,
more creative ideas. So I wanted to know: Are diverse organizations
really more innovative, and can diversity be more
than something to comply with? Can it be a real competitive advantage? So to find out, we set up a study
with the Technical University of Munich. We surveyed 171 companies
in Germany, Austria and Switzerland, and as we speak, we're expanding the study to 1,600 companies in five additional countries
around the world. We asked those companies
basically two things: how innovative they are
and how diverse they are. To measure the first one, we asked them about innovation revenue. Innovation revenue is the share
of revenues they've made from new products and services
in the last three years, meaning we did not ask them
how many creative ideas they have, but rather if these ideas
translate into products and services that really make the company
more successful today and tomorrow.

To measure diversity,
we looked at six different factors: country of origin,
age and gender, amongst others. While preparing to go in the field
with those questions, I sat down with my team and we discussed what
we would expect as a result. To put it mildly, we were not optimistic. The most skeptical person on the team
thought, or saw a real possibility, that we would find nothing at all. Most of the team
was rather on the cautious side, so we landed all together at "only if," meaning that we might find
some kind of link between innovation and diversity, but not across the board — rather only if certain criteria are met, for example leadership style,
very open leadership style that allowed people to speak up freely
and safely and contribute.

A couple of months later,
the data came in, and the results convinced
the most skeptical amongst us. The answer was a clear yes, no ifs, no buts. The data in our sample showed that more diverse companies
are simply more innovative, period. Now, a fair question to ask
is the chicken or the egg question, meaning, are companies
really more innovative because they have
a more diverse leadership, or the other way around? Which way is it? Now, we do not know how much
is correlation versus causation, but what we do know is that clearly, in our sample, companies
that are more diverse are more innovative, and that companies
that are more innovative have more diverse leadership, too. So it's fair to assume
that it works both ways, diversity driving innovation
and innovation driving diversity. Now, once we published the results, we were surprised
about the reactions in the media. We got quite some attention. And it went from quite factual, like "Higher Female Share
Boosts Innovation" to a little bit more sensationalist.

(Laughter) As you can see, "Stay-at-home Women Cost Trillions," and, my personal favorite, "Housewives Kill Innovation." Well, there's no such thing
as bad publicity, right? (Laughter) On the back of that coverage, we started to get calls
from senior executives wanting to understand more, especially — surprise, surprise —
about gender diversity. I tend to open up
those discussions by asking, "Well, what do you think of the situation
in your organization today?" And a frequent reaction to that is, "Well, we're not yet there,
but we're not that bad." One executive told me, for example, "Oh, we're not that bad. We have one member
in our board who is a woman." (Laughter) And you laugh — (Applause) Now, you laugh, but he had a point
in being proud about it, because in Germany, if you have a company and it has one member
on the board who is a woman, you are part of a select group of 30 out of the 100 largest
publicly listed companies.

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