In the modern world, impactful and prolific innovation is increasingly critical to company success. Some companies are learning that lack of diversity and inclusion in their ranks is inhibiting innovation. You’ve surely seen the headlines and statistics around the lack of diversity and inclusion in tech. For a shocking, real-world example of the result, check out the “racist paper towel dispenser” that was clearly an end-product of a team that lacked internal diversity and interest in the marketplace they intended to serve.
On the other side of the coin, there are also companies discovering that one benefit of becoming more inclusive organizationally is a corresponding improvement in the ability to quickly leverage the diverse perspectives and experiences of each member of the workforce to innovate new products and user experiences. Ultimately, a high-trust environment with significant diversity can develop quickly into a culture of meaningful innovation. An innovation culture is one in which employees feel that their company places a high value on the contribution of diverse ideas from everyone without placing blame on ideas that fail. Instead, all ideas are encouraged and employees are empowered to test those ideas in an atmosphere of experimentation and learning agility. Empowering employees to be experimental without fear of failure fosters even more employee engagement and organizational success.
So why does innovation matter? What are the opportunities that Diversity and Inclusion present? And what are some approaches your organizations can get started on?
Before you continue reading, feel free to sign up for our upcoming open office hours or our Lead Inclusively webinar where we will share a very detailed discussion on the topics of inclusive leadership, and practices that best harness team innovation.
Why it matters
The need to innovate is higher than ever.
According to one study, 84% of executives say that innovation is important to their growth strategy. Industries, technologies, and economies are changing at exponential rates, making a company’s ability to innovate more important than ever. Workplaces that are both diverse and inclusive are associated with higher individual performance because employees are better able to innovate (+83%) and maintain engagement.
Non-inclusive companies produce less innovation
As mentioned in the 2017 PwC Innovation Benchmark, 54% of innovating organizations have trouble bridging the gap between innovation strategy and overall business strategy. Innovation occurs more readily in organizations and teams where everyone feels safe enough to share their ideas and debate the merits of ideas without feeling fear that there will be negative consequences for doing so.
Companies that do not innovate become irrelevant
In today’s world, companies must accept industry disruption as a given. In fact, according to a recent survey, 80% of executives think their current business models are at risk to be disrupted. Companies that failed to innovate include former monoliths of industry such as Blockbuster, which failed to innovate when Netflix came on the scene and was rendered irrelevant within four years of Netflix launching its streaming services.
Inclusive Behaviors Maximize Innovation.
Employees at companies with inclusive leadership are more likely than employees at non-diverse companies to take risks, challenge the status quo, and embrace a diverse array of inputs. They are also 75% more likely to see their ideas move through the product pipeline and make it to the marketplace. This means that a company’s ability to embrace inclusive leadership translates to its business results and can drive the level of innovative thought that leads to successful market disruption.
Inclusive companies are more innovative and reach more new markets.
One inclusive behavior is allowing teams a safe space to respectfully debate one another’s ideas. A recent Berkeley study found that teams that debate the merits of one another’s ideas (instead of brainstorming more collaboratively) come up with 25% more ideas. Additional research from the Boston Consulting Group found that Diverse and Inclusive companies were able to increase market share 15% more and capture new markets 20% more than the non-diverse workplaces.
Diversity drives increased revenue.
Companies that are more diverse than average have generated 38% more of their revenue from innovative products and services, compared to companies that are less diverse. These numbers demonstrate that bottom line dollars are on the table when innovation and inclusion are successfully embedded into the organization’s processes.
From intrapreneur programs to innovation labs, you can check out page 21 of our new whitepaper to see what some companies are already doing to meet the increasing demand for team innovation.