What’s The Point Of Diversity? Higher Profits, For One
It's not just a question of right or wrong.
Amid the ongoing debate about diversity and inclusion, one of the biggest questions we’ve heard repeated is, “WHY?”
Not “why isn’t there more diversity?” We’ve explored this question with specific reference to women in blockchain in the past. In this case, it refers to a broader question: Why does it even matter if there are less women than men? Why do we need more people of color, or LGBT representation, either in blockchain, or technology in general?
At Crypto Briefing, we make a point of celebrating diversity, and actively shun the kind of racist and divisive views spouted by certain people of influence. Still, some readers might wonder if this is a question of economics, or just morality. Does diversity bring any material advantages?
We recently had the opportunity to discuss diversity topic with Kamales Lardi, who heads up the Women in Blockchain Switzerland think-tank. She also runs her own digital transformation consulting firm, as well as leading a company that deploys blockchain-based solutions for the supply of sustainably-sourced Malaysian palm oil.
According to Mrs. Lardi, every organization, group or movement should care about diversity, and to look at actionable steps to promote inclusivity. While there are many benefits to promoting diversity, one of them is especially appealing to businesses: profitability.
The Link Between Profitability and Diversity
McKinsey has been looking into the effects of diversity and inclusion for years. Their most recent study in 2017 found that companies practicing diversity and inclusion are on average over 20% more profitable than those that don’t.
The findings were across the board. Companies that had more diverse executives, management and general workforce, across both gender and ethnicity, were more profitable and performed better than those that were less diverse.
Of course, this is a correlation and not causation, but for any company in any sector, 20% profitability over your competitor isn’t to be sniffed at.
How Do Diversity and Inclusion Lead to Profitability and Performance?
As the data is based on correlation and not causation, it’s hard to pin these results down to any single reason. However, there are several hypotheses. Mrs. Lardi believes it comes down to the decision-making process.
“A diverse team creates value by architecting a practical way for better decision making,” she said. “As we know, our decisions are naturally side-tracked by bias, stemming from our past experiences, knowledge, beliefs, cultural background, and other factors.”
Mrs. Lardi added:
[su_quote]“A composition of diverse perspectives as part of the decision-making team makes it possible to change this context. Diverse teams also tend to do a better job of assessing risks and producing better results as an outcome.’’[/su_quote]
In a previous story on women in blockchain, Crypto Briefing touched on the concept that different perspectives provide insights to help drive decision making. This has been demonstrated through a study by decision-making platform Cloverpop, which shows that decision-making by diverse teams of three or more people outperformed individual decision making 87% of the time.
Diverse perspectives can also help increase creativity and innovation, as different people will come at a challenge from their own angles. Research conducted by Fast Company showed that companies demonstrating diversity were responsible for at least two extra product releases each year.
Furthermore, reducing spend on hiring and employee turnover has a direct impact on the bottom line. Deloitte has shown that diversity and inclusion directly contribute to employee engagement. Engaged employees spend longer with the company, thereby reducing hiring costs.
The Blockchain Context
The blockchain industry is in a pivotal position right now, according to Mrs. Lardi. “If you’re developing a project, or are in the early stages of building a company,” she said, “the last thing you have on your mind is that we need more diversity in our teams.”
It’s easy to ignore the issue early on, Mrs. Lardi elaborated:
[su_quote]“This is why we see companies like Twitter, Facebook, Google, which faced issues further down the line because they were initially so focused only on building something great. And then, later on, they found themselves on the back foot and having to make up for the lack of diversity on their teams.” [/su_quote]
The failure to address diversity early on is an issue that still plagues Silicon Valley today.
So what can we do in the blockchain space to avoid making the same mistakes? There is no broad brush solution here, unfortunately. It comes down to how we, as individuals, approach the issue. Mrs. Lardi says that the best place to start is by realizing our own unconscious biases.
“The kind of words that you use can be a deterrent if you’re not aware of it. We’re not doing it consciously to exclude people who are different; we do it because we aren’t aware of it.”
She went on to explain:
[su_quote]“But if company heads make a conscious decision that ‘we want to change this, we want to become more inclusive’ then it starts with how you communicate your company culture to the internal organization and to the outside world, online or in person. Try to question your own words and how they may be perceived by others.” [/su_quote]
She summarized: “If we behave inclusively, diversity will be the natural end result.”
So, language is among the most powerful tools we have at our disposal in making people feel accepted enough to speak up.
By adopting a more holistic mindset toward diversity, we can create a culture of inclusivity, and in turn, diverse groups feel welcome to participate. With more engagement from more points of view, higher profits, performance, and a strong competitive edge will soon follow.