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Is lack of diversity damaging your brand innovation?

In February 2017, Audi declared its support for ending the gender pay gap. It ran a US commercial featuring a young girl winning a downhill cart race. The end line was clear and powerful, “Progress is for everyone.”

The commercial attracted millions of views and thousands of comments on YouTube. Tens of thousands liked it. More disliked it. Some posted comments saying they’d never buy an Audi again – or even planned to sell the one they owned. But possibly, with women playing a leading role in 85% of auto purchases, the gamble made sense. Yes, some men might be disenfranchised – but a whole lot more cars might get sold because women appreciated the message.

Online research

Motivated consumers dug deeper (in the age of the internet, they always will.) They found pictures of the Board of Management of AUDI AG. All men. All Caucasian. All middle-aged. Screenshots of the board were posted all over social media. Suddenly the gamble looked riskier: disenfranchised men who used to love Audi; disenfranchised women who felt deceived.

Audience targeting makes sense. Disenfranchising potential customers doesn’t. Poor diversity can do that – whether it’s the makeup of your senior team, or the stars of your marketing campaigns.

Brand innovation

But what about brand innovation. Can lack of diversity negatively affect that?

Statistics prove it can. A 2015 McKinsey & Company report claimed that gender-diverse companies are 15% more likely to outperform those that are not. And ethnically diverse companies are 35% more likely to outperform ones that aren’t.

Reports and figures are easily contested. History is not. Some of the greatest episodes of human innovation have occurred when cultures interacted. During the Islamic Golden Age, for example, Islamic, Jewish and Christian scholars significantly advanced human knowledge in areas including science, mathematics, philosophy and medicine.

Cognitive biases

So why, if history shows us that innovation often springs from the mixing of cultures, don’t many businesses have a diverse mix of innovators? As is the case with many areas of diversity, various cognitive biases can be responsible.

Cognitive biases can lead to businesses disproportionately recruiting individuals of similar backgrounds or with similar characteristics. This effect can be seen both across an organisation as a whole and in groups within it. In his 1999 Science magazine article, Peter Fisk describes cognitive biases. The outcome of these biases is plain to see – whether it’s company boards dominated by one ethnic group, gender or religion – or innovation teams sharing similar cultural heritages.

Innovation is difficult. It’s hard to think outside the box. However, if you create teams using people from different ‘boxes’, they don’t have to. They already think outside one another’s boxes. A combination of diverse heritages can lead to stunning innovation.

Cultural homogeny

A desire to avoid cultural clashes is another reason for lack of workforce diversity. People of common heritage can be more predisposed to understanding one another and cooperating. Hiring similar people is one way to encourage efficient communication. But is the sacrifice worth it? If you want to innovate, is the best way to put all your eggs in one ethnic basket? Will one narrowly defined group of innovators have the same breadth of inspiration and education as a diverse one?

During the fall from prominence of mobile phone giant Nokia, all the top executives were Finns of similar age. This wasn’t the only factor in the company’s downfall. But when you’re competing against the likes of Apple and Samsung – how many disadvantages do you want?

Inspiring creativity

In a 2009 paper for the Journal of Personality and Social Psychology, Maddux and Galinsky demonstrated a clear relationship between living abroad and creativity. In a 2010 paper, they reported that multicultural experiences are an important mechanism for enhancing creativity.

Yes, diversity can be difficult. Cultural clashes and misunderstandings can result in people retreating into the very silos you want them to break out of. It takes substantial managerial effort and commitment to overcome cross-cultural hurdles. However, with Scientific American reporting that “female representation in top management leads to an increase of $42 million in firm value,” and “increases in racial diversity [are] clearly related to enhanced financial performance” – why wouldn’t you build diverse innovation teams?

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