Diversity and Innovation

Structure of the session

What is Diversity?

How do we define innovation?

Background

Empirical research

The ACTION Frame Work

References

What is Diversity?

Diversity is a commitment to recognizing and appreciating the variety

of characteristics that make individuals unique in an atmosphere that

promotes and celebrates individual and collective achievement.

Examples of these characteristics are: age; cognitive style; culture;

disability (mental, learning, physical); economic background;

education; ethnicity; gender identity; geographic background;

language(s) spoken; marital/partnered status; physical appearance;

political affiliation; race; religious beliefs; sexual orientation.

The University of Tennessee Libraries Diversity Committee Spring

2001; Revised January 2003

How do we define innovation?

Innovation, meanwhile, is also a multidimensional term, displaying

“subjective” and “objective” traits. Subjective traits of innovation include

the processes of creativity and original thinking, the communication of

creative and original thinking to others, and the uptake of those ideas

by others.

Here thinking relates to all areas of company activity, including

everyday operations and problems, through the research and

development of new or existing products, to the sourcing of new

suppliers and expansion into new markets.

Objective traits of innovation include the structures within which such

ideas are thought about, transmitted to, and taken up by others, and

the output and outcome in terms of definable benefits.

European Commission (2008), ‘Continuing the Diversity Journey –

Business Practices, Perspectives and Benefits’, p:8

Background

The global literature and company experience shows that high

productivity increasingly depends on effective functioning teams.

A team that encompasses a variety of diverse characteristics

individually, which comes together collectively, can spark creativity

and innovation, and may have a greater capacity to tackle more

complex problems and produce better solutions.

They outperform homogenous workplaces as they draw on a

greater pool of ideas and because their interaction will produce

better solutions.

The challenge for business is to manage this diversity effectively

so as to harness these outcomes.

Empirical Studies

1. There is a positive link between diversity and innovation!

Adler (2002) notes that diversity in multicultural teams is associated with

positive group outcomes such as increased levels of innovation,

creativity and problem solving.

Hennessey & Amabile (1998) suggest that diversity, when combined

with an understanding of individual strengths and weaknesses, and

working relationships that are founded upon sensitivity and trust,

enhances creativity and problem solving capability.

Empirical Studies

Niebuhr (2006) found higher levels of research and development

and innovation in regions of Germany that had higher levels of

cultural diversity than regions with lower levels of diversity.

In a most comprehensive study of 1000 international teams, Gratton

(2007) found that innovation was positively correlated with equal

gender ratio within work teams and negatively correlated with an

unequal ratio.

Moreover, the internationalization of innovation renders cultural

diversity a reality for innovative teams.

Empirical Studies

2. The linkage between diversity and innovation is a function of

different mindsets, perspectives and individual resources

Flexibility, creativity, and the ability to innovate are enhanced by the

existence of dissimilar mind sets, that is to say that like-minded people

make like-minded decisions, [limiting] the breadth and depth of

innovative and creative thinking (Ozbilgin 2008)

Diversity can contribute to more effective decision-making and

problem solving capability by providing a diverse range of

perspectives, a broader spectrum of expertise, and more robust critical

evaluation (Bassett-Jones, 2005).

Empirical Studies

3. Diversity yields innovation in SMEs too

A focus on inclusion and diversity can help SMEs to recruit and retain

the best talent and foster the conditions that can create product and

market innovation [European Commission (2008), ‘Continuing the

Diversity Journey – Business Practices, Perspectives and Benefits’,

p:24]

SMEs that seek to formalize their HRM strategies and employee

diversity training will be better able to attract workers and get the best

from them, helping to improve their market position and competitive

advantage [European Commission (2008), ‘Continuing the Diversity

Journey – Business Practices, Perspectives and Benefits’, p:24]

Empirical Studies

4. The main challenges and barriers are overcome through good

management

“Diverse teams tend to perform either better or worse than

homogeneous ones, with more performing worse than better (DiStefano

and Maznevski , 2003)

However, the application of strategies that are designed to foster good

equality practices, trust and inclusiveness through effective leadership,

when combined with creativity and innovation techniques that capitalize

on diversity to deliver innovation, provide a basis for increased business

and economic productivity and competitive advantage.

Empirical Studies

5. Women led teams companies have higher productivity and better

financial performance

The group of companies with highest representation of women on their

top management experienced better financial performance than the

group of companies with the lowest women’s representation.

This finding holds for both financial measures analyzed: Return on

Equity (ROE), which is 35.2 percent higher, and Total Return to

Shareholders (TRS), which is 34.0 percent higher (Catalyst, 2004).

Empirical Studies

6. Cultural diversity can improve innovation and profitability

Focused survey of 6560 professionals across the global companies

revealed that it is important for organizations to take advantage of

cultural diversity (Dr. Finn Majlergaard, 2010)

In most studies, culturally heterogeneous groups eventually perform

as good as and or better than homogeneous groups, but culturally

diverse groups require time and patience with early phases of the

work (Handbook of Diversity Management , 2003, pg: 209)

Empirical Studies

7. A balanced board is integral to enterprise risk management by

ensuring diversity in competence, skill and perspective

Universally, it is agreed that holistic risk assessment is influenced by

the “risk culture” in an organization

Nearly 93% of survey respondent sample agreed that “Balanced Board”

facilitates efficient risk management by ensuring diversity in the

competencies and opinions that shape by key business decisions, with

around 40 to 50 percent strongly agreeing to the proposition (WILL –

KPMG’s Women and Enterprise Risk Management Report, 2011).

Empirical Studies

According to the KPMG study, skills on which women and men

leaders were rated high on (by their ability to perform) were distinct,

yet complementary. This further affirms the need for a balanced

board, as an underrepresentation of women at the level also implies

an underrepresentation of the skills they bring – leading to potential

skill gap.

Leadership Traits/Skills

Women Men

Compliance and transparency Ability to set business directions

Persuasion Strategic thinking

Ability to adopt a creative approach &

openness to new ideas

Ability to circulate risks and reward

from a business action

Accountability Accountability

Ability to build and sustain networks/

relationships

Capability to manage complex

situations

(WILL – KPMG’s Women and Enterprise Risk Management Report, 2011).

PRACTITIONER’S PERSPECTIVES

NURTURING DIVERSITY FOR INNOVATION

The ACTION

Adopt a balanced leadership

Create and promote a balanced workplace

Train employees on adopting inclusive mindsets

Invest in ‘what’ and not ‘who’

Organize and promote employee social/affinity

networks

Nurture beyond workplace

Adopt a Balanced Leadership

Diversity is a business case and not a CSR

Promote metrics at leadership level on diversity and integrate the

aspects into the enterprise risk management framework

Communicate the long term vision of creating a diverse workforce and

nurture leadership behaviors to work across borders (virtual teams).

Leadership looks for outcomes and not processes

Reward practices that promote trust and transparency

Create and promote a balanced workplace

Promote a gender neutral, ability sensitive, culturally inclusive

workplace

Invest in recruiting people from diverse talent pool based on equal

opportunities

Create channels for people to report any incidence which may be

considered as a violation of inclusive behavior

Train employees on adopting inclusive mindsets

Create simple modules to make employees aware of their own

stereotypes and prejudices. Establish a connect between the

stereotypes and their effect on innovation in workplace

Integrate diversity competencies and case studies with the regular

learning and development programs

Create special learning forums on conflict management and applying

the concepts in real situations which otherwise would prevent

innovations

Promote an official language for all discussion forums which is the first

step towards leveraging differences

Invest in ‘what’ and not ‘who’

Organizations should create a work culture where employees have

the opportunity to participate, contribute and lead ideas equally and

equitably

Companies that promote teams that are egalitarian also promote risk

culture as there is equal accountability, which means

entrepreneurship qualities.

HCL’s employee first philosophy is a classic example of inverting the

traditional workforce pyramid which promotes what is being said

rather than who is saying it.

This approach also promotes the cultural aspect of individualism

versus collectivism in team behaviors

Organize and promote employee affinity networks

Employee networks are great resources for leveraging out of the box

ideas.

The social networking sites that companies create should not be

positioned only as a platform for employees to connect and know

about each other but also for generating ideas that can transform

everyday action of the company

Meme is a social networking platform of HCL to decode the

capability of the employees and facilitating the freedom of

expression – including suggesting ideas on business, HR practices,

sustainability, etc.

Nurture beyond workplace

Companies should identify key stakeholders to partner for

continuous innovation. This approach further strengthens their

commitment to diversity.

Stakeholders are not limited to suppliers, vendors, academia, and

civil bodies

In highly human capital intensive industry, the future employees are

also important stake holders.

HCL’s MAD LTD is one such program that facilitates student

community to come up with sustainable ideas that can be nurtured

for implementation

References on Diversity & Innovation

The link between diversity and innovation has been well documented

For examples, please see:

N. J. Alder (2002), International dimensions of organizational behaviour,

fourth edition, South Western, Thompson Learning, Cincinnati, Ohio

N. Basset-Jones (2005), ‘The paradox of diversity management,

creativity, and innovation,’ Creativity & Innovation Management, 14, 2:

169–176

S. H. Cady and J. Valentine (1999), ‘Team innovation and perceptions of

consideration: What difference does diversity make?’ Small Group

Research, 30, 730–750

O. Grassman (1991), ‘Multicultural teams: increasing creativity and

innovation by diversity’, Creativity and Innovation Management, 10, 2:

88–95.

THANK YOU