Diverse teams perform better

In my next three or four posts, I’m hoping to lay out a story that goes something like this:

  • Diverse teams outperform monocultures.
  • Biases in hiring and retention mean missing out on that performance boost.
  • Biased systems self perpetuate. It takes action to break the cycle.
  • Here are the most effective actions to take.

My motivation in writing this is that I’m speaking at the November meeting of the Rosalind Franklin Society. My working title is “Advocacy in the enterprise: What works, what doesn’t.” In that talk, I plan to share stories about some times that I’ve attempted to cause organizations to be more diverse and inclusive.

My hope is that writing these posts will force me to check my references and get my thoughts in order. If it turns out that they also make a decent intro for other people – that’s great – but this is mostly a thought exercise for me.

Onward to the first point: Do diverse teams really outperform monocultures?

Direct Experimentation

Many researchers have measured the impact of diversity on team performance. I’ve written before about my very favorite experiment along these lines. Researchers at Northwestern University and Stanford took members of various fraternities and sororities and had them work in small groups to solve a murder mystery. The control groups were homogenous – all pulled from the same greek house. The test groups were spiked with an “out-group” member, matched for gender but from a competing fraternity or sorority.

As an aside, this is just about the most trivial difference that can possibly be measured – a Planck constant for diversity, if you will.

The result: “Groups with out-group newcomers (i.e., diverse groups) reported less confidence in their performance and perceived their interactions as less effective, yet they performed better than groups with in-group newcomers

This work appears as a 2003 conference presentation titled “The Pain is Worth the Gain“, and then as a 2008 publication in the Personality and Social Psychology Bulletin titled “is the Pain Worth the Gain? The Advantages and Liabilities of Agreeing With Socially Distinct Newcomers.” The Kellogg School of Management at Northwestern published a nice (and open access) summary in 2010 titled “Better Decisions through Diversity.”

The abstract in the journal observes: “Performance gains were not due to newcomers bringing new ideas to the group discussion. Instead, the results demonstrate that the mere presence of socially distinct newcomers and the social concerns their presence stimulates among oldtimers motivates behavior that can convert affective pains into cognitive gains.”

Another team of researchers had people invest money in simulated stock markets in Southeast Asia and again in North America. The paper “Ethnic diversity deflates price bubbles” appeared in the Proceedings of the National Academy of Sciences in 2014. The authors found that “market prices fit true values 58% better in diverse markets. In homogenous markets, overpricing is higher and traders’ errors are more correlated than in diverse markets .. our findings suggest that diversity facilitates friction that enhances deliberation and upends conformity.”

The results point to a common mechanism: Diverse teams, and also individuals in diverse environments, work harder to avoid groupthink, which makes them more adept at solving problems.

So it works in the lab – but what about the real world?

Real World Results

There is also a raft of literature analyzing real world results and reading tea leaves to find the secret of success.

If you’re an academic who wants your work to be read and cited, you might be interested in the 2018 piece in Nature Communications, “The preeminence of ethnic diversity in scientific collaboration.” The authors analyzed millions of papers to look at the effect of ethnicity, discipline, gender, affiliation, and academic age on academic impact. The remarkable finding: “While these findings do not imply causation, it is still suggestive that one can largely predict scientific impact based solely on average ethnic diversity.”

The story is the same on the corporate side of the world. The 2012 paper “Gender diversity within R&D teams: Its impact on radicalness of innovation” in the journal Innovation, Organization, and Management studied more than 4,000 Spanish companies. “The results indicate that gender diversity is positively related to radical innovation.” The 2013 paper “Cultural Diversity, Innovation, and Entrepreneurship: Firm-level Evidence from London” in Economic Geography found similar results across thousands of British companies.

Okay, okay, but has anybody done a really wonky deep dive on how this works?

A Theoretical Approach

There’s a very old joke about a mathematician who asks “sure, your experiment worked, but what does the theory say?” All the experimental data seems to point in the same direction, and fortunately the theory agrees: In 2004, Lu Hong and Scott E. Page published a paper in the Proceedings of the National Academy of Science titled “Groups of diverse problem solvers can outperform groups of high-ability problem solvers.

The title pretty much gives away the punch line.

Let’s ask some consultants what they think.

Arguments from Authority

In 2015, Mckinsey published one of their trend-setting reports, which says: “More diverse companies, we believe, are better able to win top talent and improve their customer orientation, employee satisfaction, and decision making, and all that leads to a virtuous cycle of increasing returns. This in turn suggests that other kinds of diversity—for example, in age, sexual orientation, and experience (such as a global mind-set and cultural fluency)—are also likely to bring some level of competitive advantage for companies that can attract and retain such diverse talent.

If you’re not into consulting firms, perhaps you’ll listen to a four star general and commander of the US special forces instead. Allow me to commend General Stanley McChrystal’s book “Team of Teams.” While not explicitly about diversity, one of the book’s major themes is that breaking down group identities and avoiding groupthink is critical to innovation and high performance.

Put simply, the argument that building a diverse team is not worth the effort flies in the face of decades of research and experience, from multiple fields, all over the world. Failing to do the work (and it is work, more on that below) makes your company less innovative, your work less impactful, and your investors less profitable.

No Free Lunch

Let’s be blunt: Nobody is saying that this is easy.

When I let google autocomplete from a prompt of “diverse teams,” “Feel less comfortable” is higher in the list than “make better decisions.” That was a lesson learned from many/most of the studies above. The benefits of diversity come at a cost. It takes effort to recruit and retain a diverse team. The benefit is that such teams play at a higher level.

We will also encounter active resistance along the way. Let’s talk about that for a moment.

The Resistance

There is a particular sort of nay-sayer who protests that any effort to increase diversity is all about lowering standards and letting unqualified people slide. They’re the ones who insist on talking about diversity efforts as if quotas based on race or gender are the only tool in the toolbox. It’s well known that raw quotas are a pretty terrible practice, as spelled out in the Harvard Business Review piece from 2016, “Why Diversity Programs Fail.

An earlier HBR piece, from 2013, “The Trouble With Gender Targets” describes the phenomenon of resistance well: “Targets are like a red flag to a bull for these men and women. They experience it as an affront to their deeply held meritocratic principles.”

Did you catch the “men and women” in that quote? That’s going to be a big theme in the next post.

This behavior isn’t rational, but once people are “enraged” and “affronted,” they don’t tend to spend much time with the literature. Even when research, experience, and professional consultant advice all point in the same direction, resistance and confusion persist.

So we have work to do.

Fixing Problems at the Root

I’m a consultant. I solve problems for hire.

As part of my practice, I try to go beyond the superficial technical problems, and also address the underlying social pathologies. Done well, this can radically empower and accelerate teams. It’s also much more challenging and fun than merely speeding up yet another computer program.

For example: I often get brought in to help with some supposedly thorny and opaque technical problem, only to find that the team already knows the solution. In this case, finding and bridging the gap that prevented leadership from hearing, understanding, and trusting their team’s own expertise is the subtle work that leads to lasting change and improved performance. There are plenty of other “people” challenges that can hold teams back, and bias is a really common one.

As organizational pathologies go, bias is pretty easy to diagnose. If you’re paying attention, you can literally see it when you walk into the room.

That will be the meat of the next post: How to detect and measure bias.

For now, I will close with an invitation: I am -very- interested in your thoughts on this topic. If you have thoughts, please comment below, shoot me an email, message me on Twitter, or whatever. I’m easy to find.

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