What do high-performing and high-earning brands all have in common?
They’ve all learned diversity increases the innovative power of their teams. While many companies have recently supported diversity in an organization as “the right thing to do,” many haven’t fully committed to it or unleashed the ways it increases innovation.
We get it. Change can be hard, and its value uncertain. But, recent studies found that diversity has real value. Diverse companies produce 19 percent more revenue than less diverse competitors. So, if you want to be an industry leader, you need to foster an environment with different skills and perspectives. Here are a few reasons why you should invest in diverse teams over homogeneous ones:
Diverse Teams Bring In the Big Bucks
When faced with new technology or new ways of doing things, the nature of business is that revenue is front and center of every decision. And it should be. (You’re in the business to make money, after all.) Embracing new practices needs to be profitable. Expanding diversity in your organization can help your bottom line and lead to robust returns. Research from McKinsey shows there’s a strong link between diversity, financial performance, and value creation. Companies with higher gender and racial diversity tend to realize better financial returns and outperform competitors on financial performance.
How much profit are we talking about?
Companies with gender diversity at the executive level outperformed their less diverse competitors by 21 percent. And for companies that were more culturally diverse, the numbers are even bigger. Those with cultural diversity at the executive level outperformed their less diverse competitors by 33 percent. Plainly put, businesses with greater workplace diversity achieve greater profits.
On the other hand, a lack of diversity can result in lost profits. In the same McKinsey study, organizations in the fourth quartile on gender and ethnic diversity underperform their industry peers by 29 percent in profitability. (Ouch.)
So, what do you have to lose by remaining a homogenous organization?
A lot of money.
How Gender Diversity Increased Innovation: Alibaba’s Secret Sauce
Alibaba made headlines in 2014 as the world’s biggest IPO. Today, Alibaba serves hundreds of millions of customers and merchants as a multi-billion dollar e-commerce company. Alibaba is a global leader in e-commerce with revenue growth of 37 percent. The secret to Alibaba’s success? Well, if you ask Founder Jack Ma, he’ll say, “Women.”
I feel proud that more than 34% of senior management are women. They make this company’s yin and yang balanced. Women balance logic and instinct. I would say this is the ‘secret sauce’ of the company.
Alibaba boasts an impressive number of women in its workforce––women make up over 40 percent of the company. Alibaba is lightyears ahead of American companies when it comes to gender diversity and their increased innovation shows it. American companies, even progressive ones, don’t have numbers that approach Alibaba. For example, tech giants like Google and Meta only have around 31 percent of women workers, with women accounting for only around 20 percent of leadership positions.
Diverse perspectives pay off with fresh ideas and profitable innovations. As one of the world’s ten most highly valued companies, Alibaba stays ahead of the competition with an eye to the future and a workforce that is gender diverse.
Diversity Boosts Innovation and Creativity
Diverse teams can help you get the business innovation juices flowing. According to a recent study by Deloitte, people that work for companies that prioritize diversity are 83% more innovative, proving that diversity increases innovation. They are found to be more creative and more productive, which leads to better results.
Why is diversity needed for innovation?
If you want new ideas, you need new perspectives. New points of view can lead to new ways to tackle problems. When the same people look at a problem, often they see only one solution. When diversity is present, increases in innovation occur because your problem-solvers can tap into different experiences and skills to spark new ideas, discovering solutions to drive your company forward.
Nike Taps Into New Markets
Nike is not only a leader in athletic wear, but it has championed social responsibility programs and inclusivity practices. Nike embraces diversity in its organization and hiring practices, according to a 2020 internal report:
More than half its employees (58 percent) identify as non-white.
Half of Nike’s employees are women.
30 percent of directors and executive positions are held by U.S. racial and ethnic minorities.
45 percent of Nike’s global leadership (VP and above) are women.
According to recent research, diverse and inclusive companies are 1.7 times more likely to be innovation leaders in their market. This holds true for Nike and its constant ability to offer groundbreaking product strategy. For example, Nike’s successful approach to tap into a new market–Muslim women athletes. In 2017, Nike launched the “Nike Pro Hijab” as part of its lightweight, quick-dry apparel collection.
The Muslim fashion industry is booming, with Muslims spending 2.02 trillion dollars worldwide. Nike saw an opportunity to launch a product specifically for Muslim athletes—and it was good for business. The “Nike Pro Hijab” continues to be a top-selling product and its popularity rose 125 percent by the first quarter of 2019.
We ask ourselves if Nike was a homogeneous brand, would it have designed a “Nike Pro Hijab”? Or did it need diverse perspectives to see the opportunity?
As a sportswear titan, Nike continues to stay ahead of the competition by embracing diverse teams at all levels of its organization to capitalize on new opportunities and tap into new demographics.
Improve Your Brand Reputation
When businesses promote diverse teams and inclusive culture, they’re perceived as more authentic, relatable, and socially responsible––diversity is good for your brand reputation. It pays off in spades, especially to customers.
Nearly two-thirds of consumers (64 percent) are more likely to purchase from a brand that embodies diversity and inclusion. On top of that, job seekers want to see brands creating diverse teams, as 76 percent of job seekers report a diverse work environment is important in considering a job.
A brand that cultivates diverse teams taps into new customers and new talent, leading to big wins, and growth in leaps and bounds.
Many companies have reaped the benefits of having diverse teams in their organizations. So, if you’re already elevating diversity in your organization, you should definitely be tooting your own horn. Research shows that companies that advertise their gender diversity may receive a boost in their reputation. Diversity makes it easier for people to connect to your brand and helps you market to a larger audience.
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