- By Editorial Team
Last week at SweetIQ we looked at the situation for women in the tech industry, and how there’s still a long way to go before we can sit back and bask in the glow of equality. The situation is not much brighter when we look at the question of gender and ethnic diversity as a whole. However, the motivation to get started is strong. Multiple studies have shown that diverse teams make better products, and history has taught us that when good sense also makes good business, changes can happen rapidly.
Diversity is Good for Business
In 2012, a Credit Suisse report showed that companies with at least one female board member outperformed companies with no female board members by 26%. In 2015, a McKinsey report looking at over 300 companies found that companies with the highest proportion of ethnic diversity were more likely to have returns above the industry average.
Diverse Teams Work Smarter
It’s not just about money. Developing teams with individuals from different ethic and social backgrounds (and different genders) can bring about new problem-solving possibilities. According to Katherine W Phillips, writing in Scientific American, when we work with people who are different to us, we prepare more thoroughly in advance and explain our arguments more fully, working more efficiently as a result.
Diverse teams are also more likely to focus on facts than on assumed knowledge or bias, according to David Rock and Heidi Grant, writing in the Harvard Business Review. They cite a study published in the Journal of Personality and Social Psychology where teams of participants were asked to act as jury on mock trials, either groups of mixed black and white jurors, or all-white jurors (the defendant in the mock case was black). The ethnically diverse teams asked more questions relating to the facts of the case, and made fewer factual errors when discussing the case among themselves.
Diverse Teams Are More Innovative
Working within a varied team can lead to better, more innovative ideas. A study by the journal Economic Geography recently examined over 7,000 companies in London, and found that non-homogeneous teams enjoyed what they term a “diversity bonus”, with diverse teams more likely to introduce new product innovations, and better positioned to take advantage of the global marketplace.
This benefit does not only relate to product-focused teams. Having a diverse leadership team can create a trickle-down effect wherein new ideas are embraced and encouraged. A 2018 report by BCG found that in both developed and developing economies, teams with more diversity innovate more often. They found that companies that report greater diversity attribute 45% of total revenue to innovation, compared with just 26% from companies with more homogenous teams.
Diversity is Good For Business
Across the board the results are the same: diversity is a benefit to business. Building diverse teams can help team members to overcome, or become more aware of pre-held biases, and as a result encourage new ways of looking at existing structures or challenges. While teams from the same background often view problems in the same way, teams with varied backgrounds see a problem in a variety of different ways, making it more likely that one of the approaches will lead to a successful outcome.
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