Blog #5 Why do we need Diversity?

In 2004, Dr Lee Fleming of Harvard Business School released his study of 17,000 pieces of IP. HIs study was highlighted IP value vs Alignment (or for the mathematicians, 1/Diversity).

You can see the article here: http://hbr.org/2004/09/perfecting-cross-pollination/ar/1#

If we think of diversity along the bottom of this graph, we see that to the left, we have low diversity, or 'experts' and to the right we have high diversity, or 'misfits'. My words, not Lee's.

The way to read this graph is to note, that by adding diversity at any point, we on average, lower the value of that IP.

However, only a highly diverse team can make a breakthrough.

I recently had the opportunity to chat with Lee, who has since moved on from Harvard Business School and now teaches at Berkley.

We discussed the nature of leadership and why we see so much polarisation in the world, particularly around diversity and inclusion. I shared an 'overlay' perspective and some assertions that I thought could help us understand why diversity is important, who's opinion matters the most and why it's legitimate to have less diversity, on some things.

Now, before we get into the controversial stuff, I want you to look at the top right corner of this 'overlay' model.

While combining a bunch of ideas from different planes of thinking, the last idea has created an 'AHA!!' moment. The path of experimentation, see the dotted green line has taken us from a 'Classic Lens' which is limited, towards a place of lesser immediate value, but has sparked a breakthrough.

That breakthrough will bring a 10x or 100x value impact to customers in that industry. Hooray!!!

Did it matter at that moment, whether anyone was a particular culture, skin colour, different language or sexual orientation?

Nope, it definitely didn't matter. Lightening just struck!

Should we care about those things if they 'don't matter'?

According to me. Yes we should.

Why? (if it 'doesn't matter').. Read on.

Customers are the problem (read: 'Opportunity!') here.

The problem is, customers don't buy the thing you sell. Customers buy the thing they can get /do with your thing.

They buy a car to get to work.

They buy a phone to surf the net.

They buy a padlock to lock up their goods.

We need to deliver consistently to the utility needs of the customer.  Or they’ll go somewhere else.

All business leaders feel the pressure every day from customers. These leaders are tasked with solving customers problems AND providing a positive shareholder return. All in the face of hostile pressures (think Porters 5 forces).

They feel intense ‘gravity’ towards ‘experts are best’ due to this relentless pressure.

To become a more enlightened leader, leaders skewing conservative (which I think are most leaders) should invest in celebrating DEI themes, so as to practice on something that ‘doesn’t matter’ to the customer. This creates the possibility of a breakthrough, which would really matter to the customer. Embracing DEI should be in the context of encouraging experimentation and knowing that 'inside the box' will not bring a step change. 

With an ‘Enlightened Lens’ leaders can consider, what are those things that we need to be consistent on, and where might we innovate.

We should probably push those things that we’re already differentiated on and look for step change in those things we’re not differentiated on. It’s still a judgement call as to where to innovate.

At the point where lightening strikes, it doesn’t matter whether a person is LGBTQ, a particular culture or speaks a particular language.

Practicing a diverse leadership posture and embracing those classic DEI initiatives helps us take the path of experimentation, which more likely leads to a breakthrough.

Key idea: If you can’t embrace diversity, you’ll never get a breakthrough.

So what about DEI proponents? What can they do, to become more enlightened? Aren't they the enlightened ones?

According to me, no.

DEI exponents believe that bringing our whole selves to work is the ONLY important thing. That the complete individual is ALWAYS sacred.

They relentlessly drive DEI initiatives, because they feel that it is the RIGHT thing to do.

Unfortunately, most companies don’t have the resources to invest in the amount of learning that is not applicable to customer needs (due to the low value). Check out Microsoft firing their DEI team last month!

https://nypost.com/2024/07/17/business/microsoft-fires-dei-team-becoming-latest-company-to-ditch-woke-policy-report/

To become a more enlightened leader, they should regularly take a customer's selfish lens to internal efforts. Would the customer be happy to have their money spent on this DEI activity?

Key Message: Customers care about customer outcomes. The majority of our effort needs to be centred on customer outcomes, or our business will fail.

By now, I may well have upset 50% of the people reading this blog. It's not obvious which 50%!

My ambition is that conservative leaders are comfortable in the value they bring, and see more value in DEI than they already might. Also that DEI leaders see the value that they bring and recognise where the pressure is coming from, so continue to lift the customer relevance of those DEI initiatives.