Diversity Drives Innovation

The Merriam-Webster online dictionary defines “diversity” as follows:

1: the condition of having or being composed of differing elements : variety; especially : the inclusion of different types of people (as people of different races or cultures) in a group or organization <programs intended to promote diversity in schools>
2: an instance of being composed of differing elements or qualities: an instance of being diverse <a diversity of opinion>.

However, this specific focus of the word on race and gender, which is now a primary part of the definition, is only a few decades old. In the 1978 landmark United States Supreme Court ruling on university admissions, the word ‘diversity’ is used for the first time as a noun to refer to both a qualitative distinction of ethno-cultural groups and their quantitative distribution in institutions of higher education (from the paper “On diversity”).

In the early 90s the word “diversity” became closely linked with HR initiatives that promoted “tolerance” for differences in race, gender, ethnicity, religion, and sexual orientation. It was used as part of efforts to eliminate discrimination against people who weren’t part of the majority – whatever that majority was. 

In the past few years, this mindset has expanded to “diversity as a competitive advantage.”  Diversity of the seen and unseen – culture, thought, style, skills, education, workplace flexibility, and perspectives – ensures that every member of the team is represented and valued. If they feel like the belong. This more inclusive definition allows for a broader and more productive discussion.

To make sure organizations prioritize diversity, it’s worth trying to determine if the data truly support diversity as a driver of corporate value. It does. The numbers, anecdotal evidence, and logic all support diversity as a business enabler:

• In a Forbes Insights report, “Fostering Innovation Through a Diverse Workforce,” 85% of survey respondents agreed a diverse and inclusive workforce brings the different perspectives a company needs to drive innovation.  97% of the companies surveyed had formal diversity and inclusion strategies in place, viewing it as a competitive advantage that helps capture new clients, and adds to the potential for adding consumers in emerging markets.
• Companies with a strong commitment to diversity on average outperformed their peers with higher profit margins, and greater return on equity and assets. (“The Business Case for Commitment to Diversity”, 2008)
• The 2009 report, Does Diversity Pay? Race, Gender, and the Business Case for Diversity, showed that companies with greater racial and gender diversity performed better in terms of sales, revenue, number of customers, and market share.
• Employee satisfaction and engagement hinges partially on satisfaction with a company’s treatment of diverse people. (Catalyst – “Why Diversity Matters”, 2012)
• The 2010 McKinsey Women Matter report showed companies with the highest share of women in their senior management teams outperformed those with no women by 41% in return on equity and by 56% in operating results.

It makes sense. Diversity of thought, viewpoint, and mindset leads to more innovative results than “like thinking”.

For any business trying to be more innovative, it is good business practice to tap into all of the unique backgrounds, experiences, and ideas its employees represent. Diversity drives innovation.

An earlier version of this article appeared on the SAP Community Blog.